India takes baby steps to gold-linked products

[email protected] (Naeem Siddeeq)
February 3, 2013
Mumbai, Feb 3: The Reserve Bank of India (RBI) plans to introduce three to four gold-linked products in the next few months, in an effort to bring 20,000 tonnes of gold held in households into the banking system, but the measure is unlikely to cut bullion imports sharply, a senior official said.

India is the largest importer of gold, which is its second biggest import item after oil and contributes around 10 per cent to the total import bill.

Large gold imports are a worry for the government and the RBI, with the current account deficit shooting to a record high in the September-quarter, pressuring the rupee and adding to inflationary pressures.

The RBI plans to mobilise the unused gold by lending it to importers and exporters of the yellow metal, in a move it hopes will bring down the demand for physical gold.india

It wants banks to encourage products linked to accepting physical gold as deposits, invest public money in gold related products, and extend loans against gold as collateral.

Indians own about 20,000 tonnes of gold, or three times the holdings of the US Federal Reserve, in jewellery, bars and coins.

“Overnight there won't be any reduction in imports, but people need to be made curious about new products,” the RBI official with direct knowledge said. “The main conduits of gold imports are banks, forming 50-60 per cent of the total imports and supplies to jewellers. The way banks are suffering from huge NPAs (non-performing assets), this is a good product to work on."

The RBI is likely to release its final report on issues related to gold imports and gold loans mid-next week, the official said.

The RBI is designing products that could replace physical gold demand to yield similar returns, with easy liquidity, and documentation.

Indian banks' total gold loans are worth Rs 1 trillion.  Manappuram Finance and Muthoot Finance, two of the top gold loan financing institutions, together have loan books of Rs 500 billion, the official said, indicating a large business opportunity.

"The problem of gold imports can be solved only when the economy enjoys inflationary and macroeconomic stability," added the official.

Headline inflation has been above 7 per cent in the last three years, prompting savers to invest in gold, stocks and real estate, which yielded higher returns.

The RBI estimates gold imports to fall 25 per cent in 2012-13 to 750 tonnes from a record of 1,079 tonnes in the previous year due to high import duty, a jump in prices, slowdown in economic growth, and a month-long jewellers' strike.

India's current account deficit would had been lower by $6 billion at 3.9 per cent in 2011/12 instead of 4.2 per cent, had imports grown by an average of 24 per cent instead of 39 per cent, the RBI said in a recent report.

Comments

Add new comment

  • Coastaldigest.com reserves the right to delete or block any comments.
  • Coastaldigset.com is not responsible for its readers’ comments.
  • Comments that are abusive, incendiary or irrelevant are strictly prohibited.
  • Please use a genuine email ID and provide your name to avoid reject.
News Network
April 11,2020

Thiruvananthapuram, Apr 11: The effective handling of Covid-19 pandemic by the Kerala Government has received a big endorsement in the International media with the latest being a report in Washington Post which suggests that the State’s success could prove instructive to the entire country.

The Washington Post quoted Kerala Health Minister K K Shailaja Teacher as saying “We hoped for the best but planned for the worst. Now, the curve has flattened, but we cannot predict what will happen next week.”

"The Minister said six states had reached out to Kerala for advice. She, however, noted that it might not be easy to replicate Kerala’s lessons elsewhere," according to the Minister's office quoting the report here on Saturday.

Comments

Add new comment

  • Coastaldigest.com reserves the right to delete or block any comments.
  • Coastaldigset.com is not responsible for its readers’ comments.
  • Comments that are abusive, incendiary or irrelevant are strictly prohibited.
  • Please use a genuine email ID and provide your name to avoid reject.
Agencies
January 12,2020

Mumbai, Jan 12: Thousands of citizens on Sunday congregated in Mumbai's suburban Jogeshwari to oppose the new citizenship law, the proposed NRC and NPR.

They also condemned last Sunday's violence on the JNU campus in Delhi, where masked men ran riot and attacked students. Leftist organisations had claimed RSS-affiliated ABVP's role in the attack, a charge denied by the students' body.

Former Tata Institute of Social Science (TISS) general secretary Fahad Ahmed told PTI that they assembled under the aegis of 'Hum Bharat Ke Log' in Millat Nagar area.

"Prime minister Narendra Modi should call 56 students from across the country to debate on the CAA, NRC and NPR," Ahmed said in an apparent jibe at Modi's "56 inch chest" remark, which the latter had made ahead of the 2014 Lok Sabha polls.

"Why the PM is not talking to us? Why is he not communicating? Even the Britishers used to talk to Indians whom they ruled, but our PM is not talking to poor people," he alleged.

Bollywood actor Sushasht Singh also spoke on the occasion.

"We are people of this country and such acts (CAA) are tarnishing the image of our country," he said.

At the gathering, people waved banners with slogans like "I Am From Gujarat, My Documents Burned in 2002", "No CAA, Boycott NRC, Stop Dividing India, Don't Divide us", "Save Constitution", written on them.

A large number of police personnel were present at the venue.

The Citizenship Amendment Act (CAA), which was notified on January 10, grants Indian citizenship to non-Muslim minorities migrated to India from Afghanistan, Pakistan and Bangladesh till December 31, 2014, following persecution over their faith.

Massive protests were witnessed against the CAA, mainly by the student community, since its passage by Parliament in December last year.

Opposition parties have been dubbing the CAA an "anti-Muslim" legislation, a charge being debunked by the government.

The Congress and other parties like the TMC have also opposed the proposed National Register of Citizens (NRC) and the National Population Register (NPR).

Union home minister Amit Shah has said that the government won't rest until persecuted refugees are granted Indian citizenship.

Comments

Add new comment

  • Coastaldigest.com reserves the right to delete or block any comments.
  • Coastaldigset.com is not responsible for its readers’ comments.
  • Comments that are abusive, incendiary or irrelevant are strictly prohibited.
  • Please use a genuine email ID and provide your name to avoid reject.
Agencies
May 25,2020

Lucknow, May 25: Migrant workers who wish to return to their places of work after the lockdown is lifted, may no longer find the going easy now.

Uttar Pradesh Chief Minister Yogi Adityanath has said that his government will lay down stringent conditions for ensuring social security of workers from the state who are hired by other states.

"Other states will also need to seek permission from his government before engaging workers from UP," he said while addressing a webinar on Sunday.

The Chief Minister stated, "If any state wants manpower, the state government will have to guarantee social security and insurance of the workers. Without our permission they will not be able to take our people," he said.

He said all migrant workers who have returned to the state were being registered and their skills were being mapped by the administration. Any state or entity interested in hiring them will need to take care of their social, legal and monetary rights.

Speaking about the challenges his administration had faced during this crisis, the Chief Minister said, "When I talk of Uttar Pradesh, then it is natural to say that it is the state with the highest population. We have faced several challenges during the lockdown. At the beginning, migrant workers and labourers started coming to the state. We deployed 16,000 buses and within 24 hours, they were brought back to their home districts and arrangements were made to screen them."

Yogi Adityanath took a dig at the opposition leaders for the migrant crisis. "During the lockdown, if those who now raise slogans for the poor had honestly cared about workers, then migration could have been stopped. This did not happen. No facilities were given. At several places, electricity connections were cut, so people had to migrate." he said.

Legal experts, meanwhile said that requiring government permission for employing people could face a legal challenge as the Constitution guarantees the freedom of movement and residence and employment of workers.

"Article 19 (1)(D) guarantees freedom to move freely, and 19(1)(e) the freedom to settled in any part of the countryso the need for permission can be legally challenged," said a senior lawyer.

Comments

Add new comment

  • Coastaldigest.com reserves the right to delete or block any comments.
  • Coastaldigset.com is not responsible for its readers’ comments.
  • Comments that are abusive, incendiary or irrelevant are strictly prohibited.
  • Please use a genuine email ID and provide your name to avoid reject.