The Reserve Bank of India (RBI) on Wednesday decided to allow nominated banks to import gold, including coins, on a consignment basis, extending its clarification issued in November 2014, which had eased certain categories of gold imports.
In a notification issued late in the evening, RBI said while nominated banks can bring in gold, all sale of the precious yellow metal domestically will be made against upfront payments. "Banks are free to grant gold metal loans," RBI said, signalling easing of the central bank's assessment of gold imports on which it had clamped down to contain a growing current account deficit (CAD).
CAD is the measure of the difference between the inflows and outflows of a foreign currency.
The move is expected to improve sentiment in the precious metals sectors, which had been affected after a series of curbs by the central bank last year to arrest worrying gold imports.
"It is a very positive move by RBI and will go a long way in promoting for a smooth supply of raw material for jewellers," said Harsh Soni, chairman, All India Gems and Jewellery Trade Federation. "Banks can import gold and offer it to jewellers."
According to recent trade data, India's overall imports contracted at a much slower pace than expected as higher commodity imports partly offset the impact of lower prices. Trade deficit narrowed to $8.3 billion in January from $9.4 billion in November
A Nomura report said gold imports remained subdued at $1.6 billion in January, compared with $1.3 billion in December, supporting the view that the spike in imports during September-November was seasonal.