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No takers for gold sold by banks

Investors, who bought gold from banks, are in a fix as leading jewellery houses are not ready to buy it and it cannot be sold back to banks either. "We are not allowed by the RBI to buy back gold coins and bars sold by us," Assistant General Manager of the ICICI bank, Amarjit Walia said.

business Updated: Dec 17, 2009 14:47 IST

Investors, who bought gold from banks, are in a fix as leading jewellery houses are not ready to buy it and it cannot be sold back to banks either.

"We are not allowed by the Reserve Bank of India (RBI) to buy back gold coins and bars sold by us," Assistant General Manager of the ICICI bank, Amarjit Walia told PTI.

Banks cannot function as traders of commodities, including gold, RBI Chief General Manager(Communication) Mumbai Alpana Killawala told PTI over phone when asked about the reason behind the policy.

She said, "Mere selling does not make a bank a trader. Trading encompasses both selling and buying. It is a sensitive issue, we are looking into it."

However, Walia said, ICICI bank may appeal to the RBI to review its policy to rescue investors. At present 23 banks are allowed by the RBI to import and retail gold.

Leading jewellery houses like PC Chandra and Sons,Tata- run Tanishq chain, though, refuse to buy gold sold from banks.

A spokesman of P C Chandra & Sons said it was a policy decision not to buy bank gold as "people can exchange such gold with our jewellery."

Alok Ranjan, Regional Business Executive of Tanishq, a chain with country-wide presence said, "We cannot disturb our floating cash. Consumers may exchange the gold for jewellery, but in that case we deduct a substantial amount to neutralise our cost in melting gold and adding alloys like silver and copper to make it fit for making jewellery."