Author: Paul Ploumis21 Mar 2014 Last updated at 01:06:12 GMT
MUMBAI (Scrap Monster) : The Deputy Governor of the Reserve Bank of India (RBI), Mr. K. C. Chakrabarty today declined any plan of cutting the 80:20 norms which requires gold importers to set aside 20 % of Gold for export. Defending the decision of offering gold import permission to five domestic private banks yesterday, Chakrabarty said that though the Govt. has no plans of easing the 80:20 rules, the new move would help in boosting the external balance of the country by reducing cost.
While addressing the media at an event yesterday, the Dy. Governor of RBI stated that gold import will be allowed at a lower cost if competition arises in the sector. He also informed the aim of initiating cheaper gold import so that it benefits in controlling the rising Current Account Deficit (CAD) of the country.
RBI has yesterday announced the names of five private banks in India that were allowed to import gold including the HDFC Bank, Axis Bank, Kotak Mahindra, Yes Bank and IndusInd Bank as a step towards improving inward gold import of the country. As per the announcement, these banks received the Govt. authorization to import gold under the 80:20 scheme. This was however assumed as the first step towards easing the 80:20 norms imposed earlier by the RBI to curb gold import and to control CAD.
The 80:20 scheme was introduced by the Govt. of India on August 14, 2013 according to which only authorized agencies are allowed to import gold on the condition that 20 % of gold has to be reserved for exporting, while the remaining can be used for the sake of domestic use. The agencies nominated by the Govt. were subject to the gold export obligations as per the rule. Earlier, RBI has nominated six banks and three financial agencies to carry out gold import under the rule. Five more banks were added after analyzing the need for boosting gold import.
The new decision came after the CAD which stood at $ 88 billion last year was successfully been brought under control. However, the Indian Finance Minister informed that the current import duty would be revisited only after obtaining final figures of CAD, probably by April.