Indian banks seek to procure gold from abroad on annual contracts

NEW DELHI (Scrap Monster) : The Indians banks plan to enter into annual contracts with institutions abroad to buy gold- a move which is expected to boost gold imports during the peak demand season.

Earlier, the banks could import gold on consignment basis-not requiring payment of upfront cash. The bank used to lend the imported gold to jewellers who pay interest charges until the cash is fully paid. The recent curbs on gold imports by banks on consignment basis have forced the banks to sought alternative means to import gold.

The banks now plan to enter into a long term arrangement with those abroad. The annual contract thus entered into would ensure that the banks procure a certain minimum quantity of gold every year. The banks seek to buy gold on consignment basis and store in cheaper vaults. This gold would be brought to the country as and when there is a demand.

The new arrangement by the banks is expected to boost up the gold imports by the country. All India Gems and Jewellery Trade Federation welcoming the proposal states that the move would help ensure that supply meets demand.

The gold demand in the country is expected to pick up mid-August with the commencement of festive season. According to several analysts, fall in gold below Rs.25,000 per 10 gram would initiate fresh buying interest among consumers.