80:20 gold scheme relaxed on UPA government's instruction.

MUMBAI: The RBI relaxed the controversial 80:20 gold import scheme launched in May, 2014 based on the instructions it received from the Ministry of Commerce, sources said.Even as the Comptroller and Auditor General (CAG) expressed concerns about the timing of the relaxation, which the NDA government believes it benefited firms led by Nirav Modi and Mehul Choksi, sources said the Central bank did not object to it as it did not find anything fishy. “There was an advice and instruction from the government and if it was anything serious, we would have pointed out,” one of the four RBI officials investigated by the CBI told The New Indian Express. 

The official said the export-import policy comes under the government and the RBI comes into the picture only when banking and payments systems are involved.The norm was relaxed by then finance minister P Chidamabaram on May 13, 2014, barely three days before the counting of votes during 2014 general elections. On May 21, 2014, before the swearing in of the new government, RBI relaxed the norms allowing star and premier private trading houses to sell 80 per cent gold imports and 20 per cent exports. Gitanjali Jems alone imported 400 kg gold between June and November 2014 and CAG estimated the gold imported by 13 trading houses during June to November 2014 led to a windfall gain of about `4,500 crore.

“In public policy, somebody will get benefitted.

The context of how it (the policy) evolved also plays the role,” the source said. According to him, the discussion to relax the norm was going on for sometime. “It was an administrative decision of the Commerce Ministry of based on industry recommendations,” he said.     In May 2014, the Indian Bullion and Jewellers Association had complained that the relaxation was unfair as it gave a few private parties an edge over banks that were importing gold for jewellers. They said the norms allowed export houses to import up to two tonnes of gold and even those who were not engaged in bullion or gold jewellery business.