Mumbai: The Reserve Bank of India (RBI) on Tuesday instructed the banks not to sell gold imported on consignment basis to jewellers on outright basis. The clarification is expected to tighten gold imports.

The RBI allowed banks to import gold on consignment basis and also allowed them to provide gold metal loans to jewellers. However, banks were found importing gold on consignment basis and selling that to jewellers against full payment. This has increased imports as jewellers were buying gold virtually off the shelf. Banks were also considering gold imported on consignment basis to provide gold metal loans to jewellers.

RBI has said that gold imported on consignment basis, where payment is to be made after realization of money after sale, can be used only for providing gold metal loans to jewellers. The loan is for a tenure of 180 days. Prithviraj Kothari of Riddhi Siddhi Bullion said, “The move could tighten supply of gold as jewellers will have to place order for import with importing agency and wait for delivery.”

Open market premium, which fell to $2-3 per ounce, may also inch up. However, an industry veteran said that banks will now try to increase gold metal loans by importing gold on consignment basis.