The RBI adding further said that no advances should be granted by banks against gold bullion to dealers/traders in gold if, in their assessment, such advances are likely to be utilised for purposes of financing gold purchase at auctions and/or speculative holding of stocks and bullion.
The significant rise in imports of gold in recent years is a cause for concern as direct bank financing for purchase of gold in any form viz.,bullion/primary gold/jewellery/gold coin etc. which could lead to fuelling of demand for gold.
Accordingly, it is advised that no advances should be granted by banks for purchase of gold in any form, including primary gold, gold bullion, gold jewellery, gold coins, units of gold Exchange Traded Funds (ETF) and units of gold Mutual Funds.
However, banks can provide finance for genuine working capital requirements of jewellers, further added.