Friday, 22nd October 2004 (3499 views)

The gold loan scheme currently on offer by the Reserve Bank of India (RBI) is to be restructured in an attempt to meet demand for gold from domestic manufacturers.

According to the Business Standard, under the new scheme banks would be able to import gold and lend it to domestic gold manufacturers, rather than now where banks only lend it to exporters of gold jewellery.

So far the payback system for the new scheme is still in question, although banking sources believe that domestic users will have to pay back the gold loan in cash, equal to the international prices at the time of payment.

Banks will be in charge of carrying out operations and the exchange risk will need to be discussed between the borrower and designated banks, since gold prices are associated with international prices.

 

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