India’s central bank has removed a ban on the import of gold coins and medallions, it said.
Nominated banks are now permitted to import gold on a consignment basis, although all domestically sold gold will be against upfront payments, the Reserve Bank of India said on a statement.
This revives a system that was in place for 15 years – under which banks borrowed gold from international bullion banks to lend to domestic jewellers – until it was banned in 2014. But a spike in smuggling and lobbying by the country’s jewellery industry have persuaded New Delhi to relax its import curbs.
“While the import of gold coins and medallions will no longer be prohibited, pending further review, the restrictions on banks in selling gold coins and medallions are not being removed,” the bank also said.
The obligation to export under the 80:20 scheme will remain in place for gold imported before November, the RBI clarified.
India surprised markets when it removed late last year the rule that made it mandatory to export 20 percent of all gold imported into the country.
Nominated banks are free to grant gold metal loans and the Star and Premier Trading houses are permitted to import gold on documents-against-payment (DP) basis as per entitlement without any end use restrictions, it added.
Rumours have circulated since the start of the year that the RBI may cut import duties on gold, which are currently at 10 percent – perhaps by 2-4 percentage points or even to as low as two percent, according to some sources.
Importers are said to be holding off on bringing metal into the country while awaiting a prospective cut, which could be announced in country’s annual budget on February 28.
(Editing by Mark Shaw)