No proposal to convert idle gold into bullion: RBI

RBI on Saturday categorically said that there is no proposal to convert idle gold into bullion to meet the CAD crisis. A file photo shows a foreign currency exchange centre in Bangalore. Photo: G.P. Sampath Kumar.

The Reserve Bank on Saturday said it is not contemplating any proposal to buy idle gold and convert it into bullion.

“The RBI clarifies that no such proposal is under its consideration at this juncture,” the apex bank said in a statement.

There have been media reports that the RBI is considering various options of converting idle gold, including that available with temple trusts, into bullion.

Bullion usually stands for gold in form of bars before coining.

Demand for gold is the reason for rise in import of the precious metal. The rising gold import is one of the main reason for the Current Account Deficit (CAD), which widened to a record 4.8 per cent of GDP in 2012-13 fiscal.

The RBI and the government have already taken various steps to control the import of gold with a view to check CAD.

The government recently raised customs duty on gold to 10 per cent.

Import of gold went up by a huge 87 per cent from 205 tonnes in April-July 2012 to 383 tonnes during the corresponding period this year. In value terms, the increase was 68 per cent from Rs 56,488 crore to Rs 95,092 crore.

The government has targeted a CAD at 3.7 per cent of GDP, or $ 70 billion, in the current financial year. India’s CAD, which indicates the excess of imports of goods, services and transfers over exports, touched a record 4.8 per cent of GDP, or $ 88.2 billion, in 2012-13.