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Friday, June 28, 2013

RBI tightens gold import norms again

MUMBAI: The Reserve Bank of Indiasqueezed gold buyers further on Thursday, ruling out any credit transactions for imports unless they were intended to make jewellery for export, as it looks to rein in a record current account deficit. The RBI said the restrictions would also apply to imports of gold which do not have a fixed price. "In other words (authorised dealers and banks) are required to ensure that credit in any form or name is not enabled for import of any form of gold," the bank said. 

The central bank added that imports of gold using loans could continue for lending to exporters of jewellery. 

In its statement on Thursday, the central bank said imports of gold against both suppliers' credit and buyers' credit would now have to toe the line of 100 percent cash margins. These credits facilitate the funding for gold purchases. 

Gold imports hit a record 162 tonnes in May as Indians swooped to take advantage of hefty price falls, rattling the government and the central bank which are keen to rein in a current account deficit which hit an all-time high of 4.8% in 2012/13. Since May, the government has raised the import duty on gold to 8 percent and the central bank has turned the screws on supplies, forcing Indians to use cash only to buy and limiting purchases mainly to jewellery.

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