Our Bureau

Mumbai, Aug. 27 Commercial banks appointed by the RBI to deal in gold are pitching for an inter-bank gold market.“We are seeking some reforms to establish a gold industry for which an application will be made to the RBI in 3-4 weeks”, said Mr Rajan Venkatesh, Chairman of Indian Bullion Bankers’ Association.

Although spot trading in the yellow metal is permitted, there is no developed inter-bank market. Regulatory conditions are not conducive for depth in these markets, according to chief of a commercial bank.

Inter-bank market of gold is nothing but a similar one existing with regard to currency. With the establishment of such a market banks would be able to internally borrow and lend gold as per one’s requirement. This would enable banks to meet their gold demands quickly as well as would reduce imports of the precious metal.

The association also plans to seek approval to launch gold liability products such as gold certificates and gold accumulation products, said Mr Venkatesh.

The RBI had examined the issue when we had discussed this several years ago although no application was made then, he added. Despite India being the largest consumer of gold, there is no developed market for it. For this there is a need to view the yellow metal as a financial instrument than as a mere commodity.

© Copyright 2000 - 2009 The Hindu Business Line