The reference document for issuance of RBI Notification No.RBI/2012-13/499 A.P.(DIR Series) Circular No.103, dt.May 13, 2013, is paragraph 97 of the Monetary Policy Statement 2013-14 dated May 3, 2013 regarding import of gold.
In terms of AD (G.P.Series) circular No.7 dated March 6, 1998 (copy enclosed for ready reference), nominated banks/agencies were permitted to import gold on loan basis, Suppliers Credit/Buyers Credit basis, consignment basis as also on unfixed price basis.
The Working Group on Gold (Chairman: ShriK.U.B. Rao) had recommended aligning gold import regulations with rest of the imports for creating a level playing field between gold imports and other imports.
It has been noticed that bulk of the gold imported by nominated banks is on consignment basis whereby nominated banks do not have to fund these stocks. Under consignment basis, payment to the Seller is made after the sale of the product or after a specified time frame. This mode was leading to an artificial demand for gold.
Hence, RBI vide today’s notification, to moderate the demand for gold for domestic use, has advised Banks to restrict the import of gold on consignment basis by banks, only to meet the genuine needs of exporters of gold jewellery.
The above instructions will come into force with immediate effect. ADs have been instructed to bring the contents of this circular to the notice of their constituents and customers concerned.
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