Government to take steps to reduce gold imports

The government may take more steps to reduce gold imports such as banning sale of gold coins by banks.

An apex regulatory organisation of the government Monday voiced concern over the significant increase in the precious metal's imports in recent months, which will negatively effect the current account deficit (CAD) and trade balance.

"More steps will have to be taken to reduce gold imports. Export-import policy on gold will have to be reviewed. May consider banning gold coin sale by banks," Arvind Mayaram, secretary, Department of Economic Affairs in the Finance Ministry told reporters after the seventh meeting of the Financial Stability and Development Council (FSDC) held here.

The CAD, the difference between the outflow and inflow of foreign currency, touched a record high of 6.7 per cent in the October-December quarter on the back of rising oil and gold imports.

The RBI last month imposed curbs on import of the yellow metal by banks. It also put restrictions on banks and NBFCs for providing loans against gold coins as well as units of gold ETFs.

Mayaram added that the government may even consider banning the sale of gold coins by banks.

Gold and silver imports jumped by 138 percent during April 2013 and stood at $7.5 billion.

Increase in the gold imports will put pressure on the current account deficit and balance of trade which has already widened to $17.8 billion during April.

The FSDC also discussed regulating chit funds in view of the Saradha scam in West Bengal and similar ponzi schemes elsewhere in the country to protect small and medium investors.