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Our Bureau

Mumbai , Feb. 19

EXPORTERS of jewellery have been provided with some flexibility in terms of the pricing of gold and an extended period for the repayment of loans against gold.

In a circular to all commercial banks, the Reserve Bank of India has said that the maximum tenor of gold loan would be as per the foreign trade policy (FTP) 2004-2009 or as notified by the Government of India from time to time in the regard, i.e., 240 days at present as per the FTP.

Authorised dealers may open standby letters of credit (SBLC), for import of gold on loan basis, wherever required, as per FEDAI guidelines dated April 1, 2003. The tenor of the SBLC should be in line with the tenor of the gold loan, the central bank has said.

The SBLC can be opened only on behalf of entities permitted to import gold on loan basis, viz. nominated agencies and 100 per cent EOUs and units in SEZ who are in the Gem and Jewellery sector.

The SBLC should be in favour of internationally renowned bullion banks only. Authorised dealers can obtain a detailed list of internationally renowned bullion banks from the Gem & Jewellery Export Promotion Council.

The RBI has emphasised that authorised dealers must maintain adequate documentation with them to uniquely link all imports with the SBLC issued for the import of gold on loan basis.

Hailing the Government decision, jewellery exporters said gold loans for a longer repayment period of 240 days would help boost exports. Exporters were earlier reluctant to avail themselves of the credit, as the credit period was too short, considering the several problems faced by them. Exporters were also unable to complete the export commitments due to logistical reasons.

However, exporters may wait till the Budget to make any fresh commitments, said a leading jewellery exporter. "Import of gold by banks and nominated agencies may also now go up," said a jewellery exporter. As per the announcement, nominated agencies and approved banks can import gold on a loan basis for on-lending to jewellery exporters under this scheme.

On the other hand, export-oriented units (EOUs) and special economic zone (SEZ) units who are in the gem and jewellery sector can import gold on a loan basis for the manufactur and export of jewellery on their own account. Banks and nominated agencies can easily import more gold, said an exporter.

It is clarified that the maximum tenor of a gold loan would be as per the Foreign Trade Policy (FTP) 2004-2009, or as notified by the Government of India in this regard, that is 240 days as per the FTP and Public Notice No.28/ 2004-09 dated December 1, 2004.

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