Govt mulls ban on gold coin sales by banks

P Chidambaram: country not in position to afford high levels of imports; policies could be reviewed to bring down yellow metal imports

With the surge in gold imports again posing a threat to the country’s widening current account deficit (CAD), the government on Monday said it might review its import policy. It added it might ban the sale of gold coins by banks.

Finance Minister P Chidambaram said the country was not in a position to afford high levels of imports; policies could be reviewed to reduce imports of the yellow metal, he added. In May, gold imports stood at 162 metric tonnes, he told reporters.

The issue was discussed at the Financial Stability and Development Council meeting held here on Monday.

Arvind Mayaram, secretary in the Department of Economic Affairs, said, “More steps will have to be taken to reduce gold imports. The export-import policy on gold will have to be reviewed. (We) may consider banning gold coin sales by banks.”

Meanwhile, Commerce & Industry Minister Anand Sharma met P Chidambaram on Monday. He said the import of gold should be for actual usage, not for trading purposes.

India is the world’s largest consumer of gold and the commodity holds the second-highest weightage in the country’s import basket, after crude oil. According to commerce ministry data, gold and silver imports jumped 138 per cent to $7.5 billion in April, against $3.1 billion in the year-ago period.

In January, the government had raised duty on gold imports to six per cent. It had also allowed gold exchange-traded funds to deposit part of the physical gold held by them with banks; relaxation in gold deposit schemes of banks was also proposed.