A day after raising the import duty on gold to 8 per cent, the second increase in six months, Finance Minister P Chidambaram Thursday indicated that banks could impose restrictions on selling gold coins.
“Banks have a role to play in dampening the enthusiasm for gold. I think the RBI has advised banks that they should not sell gold coins,” Chidambaram said at the annual general meeting of the Indian Banks’ Association in Mumbai.
The move to curb the sale of gold coins by banks will add to the series of steps the government is taking to curb gold imports, which is playing havoc with the import bill and making a mess of its efforts to stop the current account deficit from worsening.
The RBI has so far only put restrictions on banks from selling gold coins to those planning to use it for bullion trade or speculation. But sources said the minister was articulating a plan that is in the works.
“I would urge all banks to please advise their branches that they should not encourage their customers to invest in or buy gold,” Chidambaram said.
But the World Gold Council said in a statement that curbs on gold will make the metal expensive and funnel additional demand through unauthorised channels.
The World Gold Council’s India managing director Somasundaram P R said that the nature of demand at the retail level was such that restricting supply would not be effective, and would likely to lead to non-transparent price premiums in the market.
This, he said, “will not be positive for either the economy or for society”.
Chidambaram is, however, hopeful “a day will come when we will regard gold as any other metal, it just shines a little more than copper or bronze”.