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.

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News Network
May 27,2020

New Delhi, May 27: Professor Johan Giesecke of the Karolinska Institute, Sweden, on Wednesday claimed that India will ruin its economy very quickly if it had a severe lockdown.

Claiming that a strict lockdown may disrupt India's economic growth, Giesecke during an interaction with Congress leader Rahul Gandhi said: "In India, you will do more harm than good with strict lockdown measures. India will ruin its economy very quickly if it had a severe lockdown."

While calling for a soft lockdown approach in India, he suggested that India has to ease restrictions one by one. It may, however, take months to completely come out of lockdown, he said.

He further criticised countries across the globe for having no post-lockdown strategy.

Emphasising on the disease, the Swedish health expert said that coronavirus is spreading like a wildfire across the world. "It is a very mild disease. Ninety-nine per cent infected people will have very less or no symptoms," he added.

Meanwhile, Ashish Jha, Director Harvard Global Health Institute and a recognised public health official, in interaction with Gandhi, called for a need to go in for an 'aggressive' COVID-19 testing to create confidence among people.

"When the economy is opened post-lockdown, you have to create confidence. There is a need for aggressive testing strategy in high-risk areas," he said.

He asserted that COVID-19 is not the last pandemic in the world, adding that "We are entering the age of large pandemics".

Jha further said that countries like South Korea, Taiwan and Hong Kong have responded the best to COVID-19 pandemic, while Italy, Spain, the US and the UK have responded the worst.

A few days ago, the Gandhi scion had interacted with former Reserve Bank of India Governor Raghuram Rajan and Nobel Prize Winner Abhijit Banerjee to discuss various issues related to the COVID-19 crisis.

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News Network
May 28,2020

Pulwama, May 28: A major incident of a vehicle-borne IED blast was averted by the timely input and action by Pulwama Police, Central Reserve Police Force (CRPF) and Army, the Jammu and Kashmir Police said.

According to sources, Pulwama Police got credible information last night about a terrorist moving with an explosive-laden car ready to blast at some location. They took out various parties of police and security forces and covered all possible routes keeping themselves and the police and security forces away from the road at safer locations.

The suspected vehicle came and a few rounds were fired towards it. A little ahead this vehicle was abandoned and the driver escaped in the darkness. On close look, the vehicle was seen to be carrying heavy explosives in a drum on the rear seat. Possibly more explosive would be fitted elsewhere in the vehicle, sources added.

The vehicle was kept under watch for the night. People in nearby houses were evacuated and the vehicle exploded in situ by the Bomb Disposal Squad as moving the vehicle would have involved serious threat, sources said.

The vehicle reportedly sports a number plate of a scooter registered somewhere in Kathua district of Jammu zone, sources added.

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News Network
May 10,2020

Thiruvananthapuram , May 10: Issuing latest order in view of coronavirus outbreak, the Kerala government has ordered complete shut down on all Sundays.

"With a view to prevent the spread of COVID-19, improve the quality of life, reduce the carbon emissions, protect the environment and greenery of the State, the following protocol would be observed on Sundays across the State. Sundays will be observed as total shut down days until further orders," the order read.

Following activities will be permissible on Sundays:

A) Shops selling essential items

B) Collection and distribution of milk

C) Supply of Newspaper, media, hospitals, medical stores, medical labs and related institutions

D) No social gathering is permitted except for marriages and funerals

E) Departments, agencies and activities connected with the containment of COVID-19

F) Movement of goods vehicles

G) Agencies in the field of waste disposal

H) All manufacturing and processing activities of continuous nature and ongoing construction activities will be permitted

I) Take away counters of the hotel from 8 a.m to 9 p.m, online delivery up to 10 pm

J) Walking and cycling will be permitted.

K) In addition, the following roads mentioned in Annexure will be closed for motorised traffic except for movement of essential goods and emergency vehicles from 5 am to 10 am. During this time, non-motorised traffic such as walking and cycling will be permitted.

L) Movement of persons on Sundays are allowed only for health emergencies, Government servants on emergency duties and persons engaged in activities connected with Covid-19 containment, persons involved in the activities from (a) to (k) above, priests and other religious persons responsible for conducting rituals in worship places.

M) Any other movement of persons, if any in exigencies, shall only be with the travel passes obtained from District Collector or Police authorities concerned.

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