The Reserve Bank of India is understood to be considering a proposal to allow export of gold from India. According to banking sources, this measure will put gold processing units in India on an equal footing with importers.
At present, gold can be exported only after it is converted into jewellery. With this move, gold processing units can sell gold bars, which do not have much scope in India.
After the central bank announced the gold banking scheme, banks launched gold deposit scheme across the country. Under the scheme, gold can be deposited in any form but is returned in the form of gold bars.
However, most of the banks are running losses in this business as no one wants gold returned in the form of bar due to the sentimental value attached to it, said bankers.
Moreover, many banks have approached RBI to close their gold banking business, they added.
Bankers also said that the detailed guidelines on import of gold will be issued once the norms governing export of gold are announced. Under the norms likely to be announced for import of gold, the RBI is likely to make it mandatory to channel the payments meant for importing gold through banks.
There is also a move to control import payments in order to indirectly monitor the import quantity and payments. Bankers said the move doesn't mean payments could be made directly to counterparties as part of the liberalisation of the sector.
Moreover, under the proposed guidelines, a bank will need to maintain adequate risk management procedures to counter the price risk arising from proprietary buying of gold on its own behalf.
These guidelines will cover the purview of gold imported under various heads like on consignment basis, buyer's credit basis or outright purchase etc.
Banks will also have to strictly adhere to the "Know your customer " rule because any individual can import gold without a licence, which may lead to benami transactions, said sources.
Once that is done, banks will have the discretion to allow the import through its own channel or through other vistas.
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