In a bid to tighten domestic consumption of gold and contain the widening current account deficit (CAD), the RBI has imposed restrictions on the import of various forms of gold by banks and nominated agencies. As per the norms, nominated banks or nominated agencies have to keep aside 20% of all the gold imported with customs-bonded warehouses. These entities will be allowed to import next consignment of gold only if at least 75% of the gold kept with the customs bonded warehouse has been exported.
For instance, if a nominated agency imports 100 kg of gold it has to keep 20 kg of gold with the bonded warehouse. This 20kg would be released to gold exporters against undertaking to customs authorities. Jewelers and retailers say this move by RBI is likely to cause shortage of yellow metal in the market and increase the domestic price of gold. The central bank for the first time has included dore or unrefined gold also within the ambit of restrictions.
The latest set of stringent restrictions by RBI comes on the heels of a slew of similar measures in order to contain the import of yellow metal in the country, a major factor behind widening of the CAD that hit an all-time high of 6.7% of GDP in the third quarter of 2012-13.