Mumbai: Reserve Bank of India (RBI) Governor Raghuram Rajan said the decision to scrap a rule mandating traders to export 20 percent of all gold imported into the country was a “reasonable” one and the government will review its gold import policies. The RBI held interest rates steady as widely expected at its policy review on Tuesday, but said it could cut interest rates by early next year depending on whether inflation eases further and on fiscal developments.

“The government decided that it was probably best at this point to scrap the rule and it has been scrapped,” Rajan said during a media interaction post policy. “Of course, there are now further requests to change the duty structure that the government will review in its own good time and decide … I think the decision is reasonable and let us see how it plays out,” he said.

The governor also clarified that the central bank’s forward positions in foreign currency is “one reason” for conducting open market bond sales. The central bank added a net USD 1.79 billion of up to one-year forwards in October, lower than the USD 2.6 billion added in the previous month, according to Reuters calculations based on data from the central bank’s website.