The Reserve Bank of India (RBI) should re-look the ban on banks buying back gold as such a move can improve liquidity in the system, increase the supply of gold and bring down imports, SBI Chairman Pratip Chaudhuri said on Sunday. Banks are not allowed to trade on the commodities market, including gold, as the regulator and the government fear that their entry might spike inflation. At a panel discussion on gold imports at Bancon here, Chaudhuri said, ‘The existing ban is impeding the liquidity of gold holdings in the country.’
‘Today all banks sell gold but the RBI does not allow them to buy back their own gold. Suppose somebody has taken gold from my bank and the same gold comes back to me even without opening of the seal. I cannot buy it back,’ pointed out Chaudhuri.
‘What could be the underlying thought? Don’t you think it is impeding the liquidity of gold holdings in the country,’ Chaudhuri asked RBI Deputy Governor Subir Gokarn, to which he responded that the RBI could revisit the subject once the BKU Rao report on the subject is submitted.
‘Obviously, we have to reconcile to the existing regulatory barriers. Once we have feedback on the points, we will come for debate,” he said, adding that the RBI panel would soon elaborate on ways to deal with the problem arising from high gold imports on the macroeconomic front, in the from of balance of payments.
Experts blame rising gold demand, price rise and the resulting surge in imports to hoarding by jewellers and other market participants.
‘Today all banks sell gold but the RBI does not allow them to buy back their own gold. Suppose somebody has taken gold from my bank and the same gold comes back to me even without opening of the seal. I cannot buy it back,’ pointed out Chaudhuri.
‘What could be the underlying thought? Don’t you think it is impeding the liquidity of gold holdings in the country,’ Chaudhuri asked RBI Deputy Governor Subir Gokarn, to which he responded that the RBI could revisit the subject once the BKU Rao report on the subject is submitted.
‘Obviously, we have to reconcile to the existing regulatory barriers. Once we have feedback on the points, we will come for debate,” he said, adding that the RBI panel would soon elaborate on ways to deal with the problem arising from high gold imports on the macroeconomic front, in the from of balance of payments.
Experts blame rising gold demand, price rise and the resulting surge in imports to hoarding by jewellers and other market participants.