The government’s efforts to reduce consumption of gold have not yet made an impact on the gold buyers in Kerala. Though it is too early to draw a conclusion on the consumption pattern, market men see little scope for turning people away from the lure of gold.
Over the past few months, RBI had been imposing restrictions on banks and agencies on importing gold. Curbs have also been brought in to regulate institutions involved in funding domestic gold purchase.
Going by the current trends, the impact has been too little, said B. Govindan, working president of All Kerala Gold & Silver Merchants Association. There was a seasonal decline in the purchase that had little to do with the curbs, said Mr. Govindan.
Nevertheless, he admits the rush for gold coins has fell by about 15 to 20 per cent because of the stringent measures by government.
RBI, in a circular issued last month to all scheduled commercial banks which are authorised dealers in foreign exchange and agencies nominated for import of gold, said it had decided to restrict the import of gold on consignment basis, only to meet the genuine needs of the exporters of gold jewellery. It has further been decided that all Letters of Credit (LC) to be opened by nominated banks and agencies for import of gold will be only on 100 per cent cash margin basis.
In another circular sent to cooperative banks, the apex bank laid curbs on lending against gold, and sought to restrict the facility of advances against the security of gold coins per customer to 50 grams.
Jewellers used to import gold through banks for which memorandum of understanding used to be signed between the buyer and the seller. Banks had been providing advance for the purchase, but now, the buyer has to pay the money in advance as banks have been restrained to pay advance, said Mr. Girirajan. Coupled with this, the banks have also been restrained from providing EMI facility to credit card payments by online buyers.
