Consumer Issues
No move to ban banks from selling gold coins: RBI

RBI does not permit lending against gold if the amount raised by the borrower is to be used for speculative purposes, but cannot stop lending against gold as a segment, Subbarao said

Mumbai: Contrary to speculation that the Reserve Bank of India may ban banks from selling gold coins, Governor D Subbarao said there was no such proposal at present as the proportion of gold coin sale by banks was very small, reports PTI.

 

"The answer is no! Because gold coins themselves are a very small proportion of the total import of gold," Subbarao told reporters at the customary post-policy interaction, when asked if the RBI is contemplating such a ban.

 

"If your concern really is at the macro level about gold, gold coin is not a very big variable in that problem," he added.

 

Subbarao said the RBI does not permit lending against gold if the amount raised by the borrower is to be used for speculative purposes, but cannot stop lending against gold as a segment.

 

"We cannot ban or restrict loans against gold beyond a certain point, because that is indeed a lifeline for millions of households who keep gold as a hedge for difficult times," the Governor explained.

 

Subbarao, however, pointed out that the RBI is against giving loans against raw gold or bullion.

 

Fearing a concentration of risks, the RBI in the recent past initiated a slew of measures against gold loan companies, including reducing their loan to value ratio at 60%, from a high 75%.

 

After these changes, and especially after the strong uptick in gold imports was witnessed, there has been speculation that the RBI may ban banks from selling gold coins.

 

According to analysts, gold does not have any intrinsic value and what is seen as a safe haven for investment in the current uncertain times, ends up hurting the current account deficit situation.

 

The RBI brass, led by the vocal deputy governor KC Chakrabarty, has been harping against obsession with gold and also called for a social and cultural change to reduce demand for gold.

User

Repairs: Outpriced

Roadside garages are thriving because company service centres are too pricey

Workshop...

Premium Content
Monthly Digital Access

Subscribe

Already A Subscriber?
Login
Yearly Digital+Print Access

Subscribe

Moneylife Magazine Subscriber or MSSN member?
Login

Yearly Subscriber Login

Enter the mail id that you want to use & click on Go. We will send you a link to your email for verficiation
Personal Finance Exclusive
Insurance: The onus is on you

The insurer will reject your claim if you disclose wrong facts in the form

Insurance is...

Premium Content
Monthly Digital Access

Subscribe

Already A Subscriber?
Login
Yearly Digital+Print Access

Subscribe

Moneylife Magazine Subscriber or MSSN member?
Login

Yearly Subscriber Login

Enter the mail id that you want to use & click on Go. We will send you a link to your email for verficiation

We are listening!

Solve the equation and enter in the Captcha field.
  Loading...
Close

To continue


Please
Sign Up or Sign In
with

Email
Close

To continue


Please
Sign Up or Sign In
with

Email

BUY NOW

The Scam
24 Year Of The Scam: The Perennial Bestseller, reads like a Thriller!
Moneylife Magazine
Fiercely independent and pro-consumer information on personal finance
Stockletters in 3 Flavours
Outstanding research that beats mutual funds year after year
MAS: Complete Online Financial Advisory
(Includes Moneylife Magazine and Lion Stockletter)