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Our Bureau

Mumbai , Sept. 6

THE Reserve Bank of India today announced that banks would be allowed to extend gold loans from imported gold to domestic jewellery manufacturers.

Until now banks were allowed to offer gold (metal) loans only to jewellery exporters.

The RBI has also released a list of 14 nominated banks - Allahabad Bank, Bank of Nova Scotia, Bank of India, Canara Bank, Corporation Bank, Dena Bank, HDFC Bank, ICICI Bank, Indian Overseas Bank, Oriental Bank of Commerce, Punjab National Bank, State Bank of India and Union Bank of India.

According to industry sources, MMTC Ltd and Bank of Nova Scotia were allowed to offer gold loans to jewellery exporters. MMTC was also allowed to offer loans to domestic jewellery manufacturers.

Industry sources said that with this notification, MMTC may not be allowed to offer gold loans.

However, the RBI has mandated that the gold loans to domestic jewellers should not exceed 25 per cent of banks' Tier I capital. The gold loans extended to exporters of jewellery would continue to be out of the 25 per cent ceiling.

The RBI also said that the tenor of the gold loan for the domestic jewellery manufacturers should not exceed 90 days. However, industry sources say this move could impact jewellers, as the business cycle is usually 180 days.

According to bankers, the rationale behind the RBI's decision could be to allow one single entity to conduct the full circle of operations required for gold import.

This move will basically simplify the procedures, and is not likely to impact the overall business or volumes.

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