from India Times:
In what traders termed a near panic reaction to the sliding Indian rupee, the RBI banned import of gold by domestic consumers through bank credit and has made overseas purchase of the precious metal a cash & carry business.
The move will nearly cripple retail jewellery trade and probably lead to higher smuggling into the country, putting the clock back by nearly two decades when socialistic governments restricted gold imports. A day after P Chidambaram said that”necessarily we will have to check’ gold imports,” the central bank barred gold importers using letter of credit from banks for gold imports.
“All letters of credit to be opened by nominated banks, agencies for import of gold under all categories will be only on 100% cash margin basis,” the RBI said. “Further, all imports of gold will necessarily have to be on documents against payment basis. Accordingly, gold imports on documents against acceptance basis will not be permitted.” The rupee rose 0.5% to.`56.45 to the US dollar after the measures were announced.
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