MTECHTIPS

MTECHTIPS:-RBI cracks the whip on bank loans for Gold

Thinking of opting for some loan to purchase gold in futures or for festive season? Read further and you will heave a sigh.“In terms of extant guidelines, no advances should be granted by banks against gold bullion to dealers/traders in gold if, in their assessment, such advances are likely to be utilised for purposes of financing gold purchase at auctions and/or speculative holding of stocks and bullion.” the Reserve Bank of India said in its latest Monetary Policy Review.The Central Bank also registered concern on imports of gold in recent years: “in this context, the significant rise in imports of gold in recent years is a cause for concern as direct bank financing for purchase of gold in any form viz., bullion/primary gold/jewellery/gold coin could lead to fuelling of demand for gold for speculative purposes.” the Bank noted.The Monetary Policy Statement of April 2012 had announced the constitution of a Working Group (Convenor: Shri K.U.B. Rao) to study issues relating to gold imports and gold loans by Non-Banking Financial Companies (NBFCs) in India.