RESERVE BANK OF INDIA’S STATEMENT ON GOLD IMPORTS

(This is a reformatted version of a statement issued by the
Reserve Bank of India. This was obtained from its website.) 
RBI/2013-14/148
A.P. (DIR Series) Circular No.15
July 22, 2013
To
All Scheduled Commercial Banks which are Authorised Dealers (ADs)
in Foreign Exchange/ All Agencies nominated for import of gold 
Madam / Sir, 
Import of Gold by Nominated Banks /Agencies/Entities
Attention of Authorised Persons is drawn to the Reserve Bank’s
A.P. (DIR Series) Circulars No. 103, 107 and 122 dated May
13,June 04 and June 27, 2013 respectively on the captioned
subject. ;As per these instructions, certain restrictions were
imposed on the import of various forms of gold by nominated
banks/nominated agencies/ premier or star trading houses/SEZ
units/EoUs which have been permitted to import gold for use in
the domestic sector. None of these restrictions was applicable
to import of gold for the purpose of exports or to import of
gold by units in SEZ exclusively for the purposes of exports.
2. Based on a review of the above instructions and in
consultation with Government of India, it has been decided to
rationalize the import of gold in any form/purity including
import of gold coins/dore into the country. Accordingly, the
following instructions are issued: 
a) It shall be incumbent on all nominated banks/nominated
agencies to ensure that at least one fifth of every lot of
import of gold (in any form/purity including import of gold
coins/dore) is exclusively made available for the purpose of
export. Such imports shall be linked to financing of exporters
by the nominated agencies (i.e. average of last three years or
any one year whichever is higher). Further, they shall make
available gold in any form for domestic use only to entities
engaged in jewellery business/bullion dealers supplying gold to
jewellers. 
b) They will be required to retain 20 per cent of the imported
quantity in the customs bonded warehouses. 
c) They are permitted to undertake fresh imports of gold only
after the exports have taken place to the extent of at least 75
per cent of gold remaining in the customs bonded warehouse. 
d) Any import of gold under any type of scheme, shall follow the
20/80 principle set out at (a) and (b) above. The extant
instructions, as regards import of gold on consignment basis, LC
restrictions etc. stand withdrawn. 
e) A working example of the operation the scheme envisaged in
terms the present instructions is given in the Annex. 
3. Entities/units in the SEZ and EoUs, Premier and Star trading
houses are permitted to import gold exclusively for the purpose
of exports only. 
4. AD Category I Banks are advised to strictly ensure that
foreign exchange transactions effected by / for their
constituents are compliant with the above instructions. Head
Offices of nominated agencies / International Banking Divisions
of banks would be responsible for monitoring operations of the
revised scheme taking into account transactions put through
different centres. 
5. Government of India will be issuing separate instructions, if
any, to the customs authorities/DGFT to operationalize and
monitor these import restrictions. 
6. The above instructions will come into force with immediate
effect. Authorised dealers may please bring the contents of this
circular to the notice of their constituents and customers
concerned. 
7. The directions contained in this circular have been issued
under Section 10(4) and Section 11(1) of the Foreign Exchange
Management Act (FEMA), 1999 (42 of 1999), and are without
prejudice to permissions / approvals, if any, required under any
other law. 
Yours faithfully
Rudra Narayan Kar
Chief General Manager-in-Charge 
Annex
An example of the working of the scheme: 
1)Nominated agency ABC imports say 100 kg of gold in any
form/purity. 
2)Out of the above import of 100 kg, 20 kg gold held in the
bonded warehouse can be got released in part or full to be sold
to exporters of gold against undertaking to customs authorities
as is the practice now. 
3)Any further import of gold by ABC shall be permitted by the
customs authorities only to the extent of actual export out of
20 kg of gold held in bonded warehouse. This can happen only
after at least 15 kg of gold out of 20 kg is actually exported
from the previous lot. 
4)If ABC wants to place order for the second lot of import, only
75 kg of import (including 15 kg for exports) will be permitted
which will again follow the procedure outlined above. At this
stage, total gold with the bonded warehouse meant for the
exporter will be (5 + 15) i.e. 20 kg. Out of this at least 15 kg
(i.e. 75% of the above 20 kgs) will have to be actually exported
to enable ABC to import again. This procedure will be followed
for every lot of import. 
5)If for any reason, ABC is not able to channelize the gold held
in bonded warehouse for exports, no further imports can be
undertaken by ABC who will also arrange for re export of the
gold in the bonded warehouse. 
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