Follow Us:
Monday, July 13, 2020

Rein in gold coin sale,banks told

While ruling out a ban on banks selling gold coins,the Reserve Bank of India (RBI) has said it does not want them to aggressively market these.

Written by Fe Bureau | Pune | Published: May 29, 2013 12:39:24 am

RBI rules out blanket ban,but stresses on financial instruments

While ruling out a ban on banks selling gold coins,the Reserve Bank of India (RBI) has said it does not want them to aggressively market these.


* BSE Sensex

* NSE Nifty

* Top Gainers/Top Losers

* Top Value

* Top Quantity

* Best Performing Mutual Funds

RBI governor D Subbarao said on Tuesday that the attempt to discourage banks from selling gold coins stems from a need to draw customers back towards financial saving instruments,which,in turn,are good for the economy. The governor acknowledged that the demand for gold was linked to high inflation. “I recognise that the attractiveness of gold is a consequence of the high inflation,” he said.

Subbarao was speaking to the media on the sidelines of a meet organised by the College of Agricultural Banking (CAB) of frontline managers on Business Correspondent (BC) model in Pune.

The governor said he was not against giving loans against upto 50 gm of gold coins,but wanted a check on such loans. “If people want to buy gold for savings,the route should be available for them but for genuine purpose. But if the LTV (loan-to-value) ratio is not restrained,there is a possible risk. Gold loans form a small part of the bank’s business and there is the concern of instability of NBFCs,” he said.

People must understand that there are alternate modes of investment and interested banks are aggressively selling gold and this adds to the country’s current account deficit,he said.

Earlier during the meet,the governor sought views from participants,wanting to know if banks were pushing gold coins. On Monday,RBI said that banks would not be allowed to give loans against units of gold exhange-traded funds (ETFs) and gold mutual funds.

Without any direct reference to the recent chit-fund scam in West Bengal,Subbarao expressed concern over such schemes. “Such unscrupulous schemes are beyond regulatory purview and people are being lured by offers of exorbitant rates of interest. When these fail,people end up losing their entire savings and this is very distressing,” he said. He said RBI plays two roles — that of a regulator and an educator — and the meet in Pune with frontline managers was an effort in this context.

“People should understand that there are other viable alternatives of financial instruments. Only then can they be weaned away from such schemes and this is the overall objective of the RBI,” he said.

📣 The Indian Express is now on Telegram. Click here to join our channel (@indianexpress) and stay updated with the latest headlines

For all the latest Business News, download Indian Express App.