To ease the pressure on import of gold, the Chairman of State Bank of India, Mr. Pratip Chaudhuri has suggested that all banks in the country should be permitted to buy back gold coins sold by them to retail customers.
Stating that the present domestic economic situation faces high demand for gold coins, SBI's chairman said that allowing banks to buy back the yellow metal coins would help to create liquidity in gold, and thus would lighten the burden on imports of the precious metal.
At present, the central bank's norms restrict banks from buying back gold coins/bars sold by them. According to a research carried out by industry association, Assocham, India imports a large quantity of gold to meet its gold demand. India's demand for the yellow metal is equal to a third of the global gold demand.
In India, there are many ways to make investments in gold. These investments can be made in physical form (buying gold coins/bars) and in electronic form (Gold ETFs or gold mutual funds or E-gold).
It is to be noted that gold imports decline the country's foreign exchange reserves, which could have otherwise been used for the importing other commodities. The high value gold imports are having an adverse effect on the country's economy. Due to this reason, RBI has banned banks from lending for the purchase of gold in any form.