Reserve Bank of India Makes Moves to Slash Gold Imports

India's central bank, the Reserve Bank of India (RBI), has instituted moves to cut imports of gold which have led to a record current account deficit.

The central bank has asked that all banks and agencies authorized to deal in gold to export a minimum of 20 percent of every lot of imported gold in all forms. Meanwhile, domestically, it must be made available only for jewelers.

The new RBI guidelines call for banks to maintain a fifth of their imported gold in customs bonded warehouses. They are only allowed to import more gold after exporting at least 75 percent of the gold from the warehouses.

In June, the RBI said there could not be credit transactions for gold imports unless they were intended for jewelry as exports.

Last month, the government increased the levy on gold to 8 percent from 6 percent after demand for the yellow metal surged in May to 162 tons, approximately double the average monthly level.

In January, the government raised tax on gold to 6 percent from 4 percent.