However, the limits on banks in selling gold coins and medallions are not being removed, the RBI said. Banks are free to grant gold metal loans, the RBI said, adding that rules relating to the 20:80 scheme on gold imports will apply only to all unused gold stock imported before November 28, 2014.
The 20:80 scheme had mandated that for every consignment of gold imports, at least a fifth should be used for exports before the next consignment was imported. Nominated banks are now permitted to import gold on a consignment basis but all sale of gold domestically will, however, be against upfront payments.
Commenting on the decision, Mr. Somasundaram PR, MD of the World Gold Council, India said, “These are important clarifications in the right direction following removal of 80:20 import restriction and definitely positive for the industry, restoring previous position. It is the right time to look at all aspects of Gold Policy with a longer term perspective, going beyond just import policy and incremental changes. The focus of government must be on making gold a smoothly fungible asset in the hands of the millions of households.”