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HC seeks Govt, RBI replies on easing of gold import curbs for selected cos

The Delhi High Court on Thursday sought responses of the Centre and the Reserve Bank of India (RBI) on a plea challenging a government circular permitting select trading houses to procure gold for export as well as for the domestic market.

Justice Vibhu Bakhru sought replies from the Ministry of Commerce and the RBI by 23 September on the plea of Delhi Bullion Jewellers Welfare Association which has contended the circular was passed without following due procedure and is not a policy decision.

The petitioner organisation has contended the 21 May, 2014 circular was issued in an ‘arbitrary manner’ by the previous government and that too right after the Lok Sabha election results were announced.

The association has said that by allowing star trading houses and premium trading houses (STH/PTH) to import gold under the 20:80 scheme, ‘these entities will end up controlling the gold market’.

The Reserve Bank of India (RBI) had in July last year imposed restrictions on gold imports in order to check burgeoning current account deficit and sliding Rupee. The central bank had tied imports with exports and prescribed a 20:80 formula. This facility was available to select banks and other entities were barred from importing the yellow metal. Under the 20:80 scheme,  an importer has to ensure that at least one-fifth, or 20 per cent, of every lot of imported gold is exclusively made available for exports and the balance for domestic use.

The decision to ease the restriction follows representations from jewellers, bullion dealers, banks, and trade bodies.

The eligible STH and PTH, however, will have to follow certain conditions.

Meanwhile, Gold prices surged to hit a three-week high at the domestic bullion market on Thursday following heavy buying from jewellery stockists and traders, driven by buoyant overseas sentiment.
Silver also rebounded sharply, owing to robust speculative demand and good industrial off-take.

Domestic sentiment turned highly bullish after a strong wave of buying swept overseas markets, triggered by worsening geopolitical tension as well as mounting worries over renewed euro zone crisis amid bargain hunting, a bullion trader said.

Standard gold (99.5 purity) hardened by Rs 260 to finish at Rs 28,375 per 10 grams from Wednesday’s Rs 28,115.
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