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RBI allows star trading houses to import gold under 20:80 scheme

LiveMint logoLiveMint 21-05-2014 Anup Roy

Mumbai: The Reserve Bank of India (RBI) on Wednesday allowed star trading houses to import gold under its existing 20:80 scheme.

Importers can buy gold, provided 20% of it is exported as finished products, the central bank’s rules say. Star trading houses are big gold importers, buying gold of up to several hundred kilograms. They also export finished gold jewellery products to the overseas markets.

The Reserve Bank had banned import of gold through such trading houses on 13 August in response to a widening in the current account deficit. However, the shortage of gold meant that smuggling rose and the domestic price was dearer by roughly $100 per ounce than international prices.

“Gold imports were so far being done by banks. The number of institutions that can import gold will increase and supply should improve marginally,” said Naveen Mathur, associate director, commodities and currencies, Angel Broking Ltd.

“This is a positive move for the industry since the relaxation will enable import of more gold and result in some softening in the gold prices in the domestic market since premium will come down,” said Haresh Soni, chairman, All India Gems and Jewellery Trade Federation.

The Reserve Bank also allowed banks to give gold metal loans to domestic jewellery manufacturers, out of the eligible domestic import quota of 80%.

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