RBI imposes restrictions on gold loans by Co-op banks

Intensifying the efforts to discourage the demand for gold, the Reserve Bank of India has extended the restriction on advance against gold on co-operative banks as well. RBI has directed state/central co-operative banks to ensure that the weight of the specially minted gold coin(s) for which they are granting advance does not exceed 50 grams per customer.
Also the amount of loan to any customer against gold ornaments, gold jewellery and gold coins (weighing up to 50 grams) should be within the Board approved limit. Similar limitations are already in force on commercial banks.
Recently, the government raised import duty on gold to 8% from 6%. Banks have also been advised not to sell gold coins. RBI has also imposed restrictions on gold imports by banks.
The increasing imports of the yellow metal has become a cause of concern for both the government as well as the RBI as it putting pressure on the CAD (Current Account Deficit), which is likely to be around 5% of the GDP in 2012-13.
The monthly average of gold import in 2012-13 was 70 tonnes. The rise in gold import is also linked to the fall in its prices in the international market.

Month: Current Affairs - June, 2013