RBI panel proposes import curbs to check gold demand
The RBI panel, headed by KUB Rao, suggested cheque payment for gold purchase beyond a threshold, introduction of savings products like gold certificate, inflation indexed bonds, gold-linked bonds to discourage investment in physical gold, prohibition of bank finance for buying gold and revival of the two-decade old proposal to set up a Bullion Corporation.
A record high current account deficit of 5.4 percent of GDP in the September quarter has raised concern at the RBI, prompting it to link further monetary policy easing to a lower current account deficit. “The economy needs to moderate the demand for gold imports and bring down the current account deficit (CAD) to a more sustainable level,” it said.
“The group’s recommendation that setting limits on imports by canalising agencies and banks can reduce the demand for gold should be read from the context of an extreme and dire need to reduce gold imports, when external stability is threatened. When the CAD as a per cent of GDP comes down to a sustainable level, these restrictions need not be considered,” it said. Currently, banks account for about 60 per cent of the total gold import.
It suggested that NBFCs may obtain
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