Wednesday, June 12th 03:40 PM IST

India extends ban on advances to all forms of Gold

# India gold reserves  # paper gold  # gold backed schemes  # Gold ETF  

Purchase of any form of gold, whether it be from the bullion market, jewelry, gold coins, gold Exchange Traded funds or Mutual Funds would not be eligible for advances from any financial organization.

NEW DELHI(BullionStreet): India's central bank, the Reserve Bank of India (RBI) announced yet another anti gold measure by extending restrictions on granting of advances to any kind of gold.

The move followed a decision last week by the central bank to extended restrictions on gold import to other agencies in addition to banks.

All these are aimed at reducing current account deficit which climbs to dangerous levels, mainly due to staggering gold imports.

Indian government and the central bank began taking stringent measures to curtail gold imports from this fiscal that includes a ban on advances for gold purchase of any kind and reducing the limit up to which loans can be disbursed.

RBI already issued new guidelines and rules for the disbursal of loans and advances against gold assets of any kind and put in special provisions for the disbursal of loans and has also put a cap on the maximum amount of gold which can be used to give loans against.

The orders given under the new guidelines and rules would cover all banking institutions as well as all Non-Banking Financial Companies, in order to ensure complete coverage of the scheme.

The RBI has put a limit of 50g on the maximum weight of specially minted gold coins against which loans can be given, and has also ordered disbursals of loans against jewelry to be according to the prescribed limits.

Purchase of any form of gold, whether it be from the bullion market, jewelry, gold coins, gold Exchange Traded funds or Mutual Funds would not be eligible for advances from any financial organization.

Meanwhile, shares of India's leading luxury watch maker Titan Industries dropped sharply Wednesday amid concerns that restrictions put by RBI on gold imports will hit business prospects.

After making a weak opening, shares of the company on Wednesday tumbled 12.64 per cent to Rs 206.50 - its 52-week low on the Bombay Stock Exchange. Titan's stock has since lost over 24 per cent.

At the National Stock Exchange, the scrip nosedived by 12.66 per cent to touch a one-year low of Rs 207.15.

In a filing to BSE, Titan Industries said it has been clarified that all imports of gold for domestic consumption - either through banks, nominated agencies or directly - can be made only with 100 per cent cash margin.

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