Tough RBI norms for gold importing firms

MUMBAI, July 7: The Reserve Bank of India has set a capital base of Rs 300 crore and a minimum capital adequacy ratio of 9 per cent as the ...

MUMBAI, July 7: The Reserve Bank of India has set a capital base of Rs 300 crore and a minimum capital adequacy ratio of 9 per cent as the two major preconditions for the scheduled commerical banks to be eligible for import of gold, silver and platinum.

The central bank on Monday announced detailed eligbility criteria to apply for authorisation as a nominated agency for the import of the precious metals.

The export import policy 1997-2002 permits exporters availing schmes for gold/silver/platinum jewellery to obtain these metals from nominated agenciesscheduled commercial banks. The existing nominated agencies are MMTC Ltd, Handicraft and Handloom Export Corporation, the State Trading Corporation and the State Bank of India.

Story continues below this ad

According to RBI, the applicant should "unimpaired toral capital of Rs 300 crore or more for its business in india". In case the bank has a lower capital base, its global capital can be taken into consideration for the purpuse provided its head offices commits to offer support to its gold operation in India, the RBI release said.

The applicants should also have a fairly advanced risk management system in place to be able to identify the various risks involved in the supply of gold to the eligible categories and evolve control measures.

In addition, they should have had previous experience or familiarity in respect of gold related business activities. Banks which do not satisfy this requirement should provide sufficient evidence about its intention and ability to forge links with international banks which have a long standing eexperience in the markets, the release said.

Banks satisfying the criteria prescribed by the central bank are required to submit their applications along with a summary of the latest audited balance sheet and profit and loss account.

Story continues below this ad

Foreign banks will have to submit the audited financial statements of their local as well as global operations and their capital adequacy ratios separately.

The Reserve Bank will consider the first lot of applications received up to July 31.