laying emphasis on its oft repeated stance of reducing gold imports, the Finance Ministry has indicated a likely ban on gold coins sale by banks could also be considered as a step to curb the practice.
“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,” Economic Affairs Department Secretary in the Finance Ministry Arvind Mayaram said on Monday.
Speaking to the media on the sidelines of the meeting of the sub-committee of Financial Stability and Development Council (FSDC), headed by RBI Governor D Subbarao, Mayaram said that apart from curbs on gold imports, the council also reviewed measures in place to regulate chit fund companies in the wake of the Saradha scam.
Gold and silver imports during April, 2013 jumped by 138 per cent to $7.5 billion against $3.1 billion in the year-ago period. Due to high gold imports, the country’s trade deficit in April widened to $17.8 billion year on year. Higher trade deficit in turn puts pressure on Current Account Deficit (CAD), which has been described as the biggest risk to the Indian economy by the RBI.
The CAD, which is difference between the outflow and inflow of foreign currency, touched a record high of 6.7 per cent in the October-December quarter of FY13 on the back of rising oil and gold imports. last month, the RBI had imposed curbs on import of the yellow metal by banks. Besides, it has also put restrictions on banks and non banking financial companies (NBFCs) for providing loans against gold coins as well as units of gold ETFs.
The Government has also taken steps like hike in import duty to restrict gold imports. Gold imports into India, the world’s largest consumer of the metal, stood at around 830 tonnes in 2012-13.
The FSDC sub-committee discusses issues relating to the financial sector development and stability, including issues relating to inter-regulatory coordination. The sub-committee includes financial sector regulators, Economic Affairs Secretary, Financial Services Secretary, as well as chairmen of SEBI, IRDA and PFRDA.