Chennai sources added the government will allow banks to do bullion business to hold, buy, sell, hedge and leverage gold. Accordingly this will facilitate intervention of banks in developing bullion as an asset class. Meanwhile as per the current norms, banks can only be a consignment or channelizing agent in the import of bullion for jewelers and exporters. They route the gold from international bullion banks like Nova Scotia and supply it to the trade, without taking the risk of holding the metal.
PR Somasundaram, MD, India, World Gold Council said “Allowing bullion banking will be a main step towards developing gold infrastructure in India and establishing gold as an asset class. Once bullion banking is allowed, banks can handle bullion risk, hold gold account, hedge and take active part in the proposed gold spot exchange”.
Moreover according to him, one of the main barriers working against the successful implementation of Gold Monetization Scheme is the inability of banks to take the risk of holding gold. Hence Bullion banking will not just promote Gold Monetization Scheme, it will also augment the proposed bullion spot exchange and support better price discovery. Further the Niti Aayog, in its recommendations on Gold Policy, has also asked RBI to ensure greater participation by the banks to enter the gold business for better price discovery and availability of gold.
Cyclonic Storm prevails over AP & North Tamilnadu According to sources the IMD stated the deep depression over south Bay of Bengal is likely to intensify into a cyclonic storm over the next 24 hours. Meanwhile the cyclonic storm is expected to move towards Andhra Pradesh and adjoining north Tamilnadu coast over the next 72 hours and the regions could witness heavy to very heavy rainfall.
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