RBI lifts gold import curbs ahead of budget

In a move that could boost the supply of gold in the India, the world's biggest consumer of the yellow metal, the Reserve Bank of India (RBI) in consultation with the government has relaxed gold import norms and permitted nationalised banks to import gold on consignment basis, for onward lending to jewellers.

While the import of gold coins and medallions will no longer be prohibited, pending further review, the restrictions on banks on selling gold coins and medallions are not being removed, RBI said.

''Nominated banks are now permitted to import gold on consignment basis. All sale of gold domestically will, however, be against upfront payments. Banks are free to grant gold metal loans,'' RBI said in a release.

Star and Premier Trading Houses (STH/PTH) can import gold on DP basis as per entitlement without any end use restrictions, RBI said.

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, RBI said.

''Nominated banks are now permitted to import gold on consignment basis. All sale of gold domestically will, however, be against upfront payments. Banks are free to grant gold metal loans,'' RBI said in a release.

RBI and the government have been receiving requests for clarification on some of the operational aspects of the guidelines on import of gold consequent upon the withdrawal of 20:80 scheme, the release said.

Gold imports into the country are set to swell in coming months after the central bank eased gold import curbs, ahead of an expected cut in import duty in next week's federal budget.

Imports had dropped despite the reversal of the 80:20 rule as the duty remained high and the industry lacked clarification on the central bank's position.

The imports that are stuck at the airport, as customs officials were awaiting clarification from the RBI, will now be cleared, say analysts.