Dematerialise gold : RBI's Subir Gokarn
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This spike in gold demand was in spite of the record price rally that the metal witnessed last fiscal.
It can be noted that in April the RBI brought down the loan to value or LTV that gold loan companies like Muthoot Finance or Manappuram Finance could offer just 60 percent of the market value, from a high of 85-90 percent.
In the October 30 credit policy, the RBI also banned banks from funding gold buying by gold loan companies and NBFCs.
Notably, RBI senior most deputy governor K C Chakrabarty has for long been calling for public awareness campaigns to discourage people from snapping up gold.
He went to the extend of saying that the poor never could make money by investing in gold.
In the Budget 2012-13, the government also did its bit by increasing the import duty on the precious metal.
Meanwhile, Gokarn further said that there is no reason as to how investors seeking better returns and looking at gold as a hedge against inflation can be stopped from investing in the commodity.
However, finding ways to reduce the reliance on physical holding is crucial to win over the situation, he added.
Drawing from a report under preparation, Gokarn suggested four new products which could be introduced to arrest high gold imports: a modified gold deposit scheme; a gold-linked account that will act as a demat account; a gold accumulation plan that will work on the lines of the SIP (systematic investment plan) for mutual funds, and finally a gold pension plan that will encourage people having high gold possessions sell and get returns on liquidation over a long period.
Chakrabarty, who late last week got extension till December 31, however, said that the introduction of such products can lead to regulatory overlaps. He added that RBI is in touch with its peers including capital market watchdog Sebi on the issue.