Financial Daily from THE HINDU group of publications
Sunday, Oct 23, 2005
Financial Daily from THE HINDU group of publications Sunday, Oct 23, 2005 |
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Precious Metals Money & Banking - RBI & Other Central Banks Industry & Economy - Exports & Imports RBI against gold imports as personal baggage `It may become another source of money laundering' Sarbajeet K. Sen
New Delhi , Oct. 22 CONSENSUS may be evolving among official circles on a fresh round of liberalisation of the gold import policy, but as a personal baggage it appears to be too heavy for the Reserve Bank of India to handle. According to official sources, the RBI has expressed fears that permitting free imports of gold in the form of `personal baggage' by inbound travellers could open up a fresh avenue for money laundering by unscrupulous elements. "The RBI feels that allowing gold imports as personal baggage might become another source of money laundering," a senior Finance Ministry official told Business Line. The Ministry of Finance that has had extensive dialogue with the RBI on the framing of the new policy seems to be reasonably convinced by the RBI's views. Officials of the ministry said that permitting such free import of gold might be a distant dream. "As things stand, import by all does not appear to be a realistic proposition," they said. At present, import of bullion is allowed by banks and other nominated agencies that are permitted by the RBI. Now, around 13 banks are active in importing the yellow metal that is then offloaded to jewellery exporting units and other large consumers. The Central Bank also feels that permitting imports by individuals might have an adverse impact on the country's foreign exchange reserves in the long haul, according to industry representatives, who have held discussions with the RBI and Government during the framing of the new policy. The finalisation of the new gold import policy is in an advanced stage and could be announced any moment. "We are very close to finalising the policy. It would be announced once all the cogs are in place," Finance Ministry officials said. The Government and the RBI seem to have arrived at a broad agreement that a much larger number of participants should be allowed to have a play in import of gold. It is understood that as against a limited number of banks that are allowed to import gold, at present, the proposal under consideration is to permit all export houses registered with the Ministry of Commerce to undertake imports of the yellow metal. However, to guard against misuse of the import route it is to be specified that payments for all such transactions have to be through formal banking channels. The importer would also have to adhere to all the provisions of the Foreign Exchange Management Act.
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