Ruling out ban on sale of gold coins by banks, the Reserve Bank of India, on Tuesday, asked lenders to refrain from aggressively selling the precious metal.
“We do not want banks to aggressively market gold. We do not want that to become a business,” RBI Governor D. Subbarao told reporters on the sidelines of a conference here.
Stating that the central bank does not intend to ban sale of gold by banks, he said “gold loans are a very small part of the banking business.’’
In a bid to curb demand for gold, the RBI, on Monday, imposed restrictions on banks and NBFCs for providing loans against gold coins as well as units of gold ETFs and mutual funds.
Stating that the route of buying gold for the purpose of genuinely saving should be available to the people, Dr. Subbarao emphasised that investment in the financial sector was good for the economy.
He also noted that the attractiveness of gold was a ‘consequence of high inflation’.
Talking about the need for financial inclusion, he said the RBI had a two-fold responsibility as a regulator and public policy institution, and it was important to make people understand viable alternative avenues of investment as part of financial inclusion to wean them away from such schemes.
Dr. Subbarao further said there were many ‘unscrupulous schemes’ (which does not come under the regulatory purview) that lured people with exorbitant rates of interest. The conference was attended by about 90 delegates comprising rural customers, business correspondents and rural branch managers of commercial banks from Gujarat and Chhattisgarh.