Our Bureau

Mumbai, March 1

The Reserve Bank of India (RBI) has decided to permit more banks to import gold and ease the eligibility criteria.

Inviting applications from banks for permission, the RBI said that it would apply the eligibility criteria liberally while considering these applications. This, it said, was being done to enhance competition in this sector. Currently, 17 banks are authorised as nominated agencies for import of gold.

Currently, to apply for authorisation as nominated agency for import of gold, the applicant entity should be a scheduled commercial bank with an unimpaired total capital of Rs 300 crore or more for its business in India. In case the capital for its business in India falls short of this, its global capital can be taken into consideration, provided it has sufficient experience and expertise in the area of gold internationally and is willing to submit a letter of undertaking from its head office to the effect that it would stand ready to provide support and assistance to its gold operation in India.

The bank's ratio of total capital to risk-weighted assets for business in India should be 9 per cent or more as per the latest balance sheet. It should have fairly advanced risk-management system in place to be able to identify various risks involved in the supply of gold.

(This article was published in the Business Line print edition dated March 2, 2006)
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