Gold Imports Hit Second Spot after Crude.

On the back of soaring demand from gold-backed exchange traded funds, India’s gold imports have climbed to the second slot, just after crude, in the overall imports basket. Despite gold prices hovering around Rs 29, 200 (per 10 gm) and a fall in demand for jewellery, imports of the yellow metal stood at a record Rs 2,15,000 crore during April-November, 2011, as per World Gold Council (WGC) data. The surge has maintained despite the government’s decision to raise import duty on gold to Rs 300 per 10 gram from Rs 200 in 2010-11.

India produces just 0.5 per cent of its annual gold consumption. According to analysts, banks account for more than 80 per cent of the annual imported bullion traded in the wholesale and retail markets. In 2009, the Reserve bank of India (RBI) had bought around 200 tonnes from IMF due to market uncertainty and recession. SMC global (one of India’s largest stock exchange brokers) said that the RBI’s move to allow seven more banks including four associate banks of State Bank of India to import precious metals like gold has pushed up the demand. At present, 30 banks in India are allowed to import precious metals. According to RBI data, banks like Axis Bank, HDFC Bank, Allahabad Bank, Standard Chartered, ICICI, Bank of Nova Scotia, Canara Bank, Kotak Mahindra, Syndicate Bank and Union Bank of India are some institutions that are already allowed to import gold and silver.

The seven banks which were added to the list were — South Indian Bank, State Bank of Bikaner, Karur Vysya, State Bank of Mysore, State Bank of Hyderabad, State Bank of Travancore and Punjab and Sind Bank.

Source : indianexpress.com