The Reserve Bank of India has advised banks that no advances should be granted for purchase of gold in any form, including primary gold, bullion, jewellery, coins, units of gold Exchange Traded Funds (ETFs), and units of gold mutual funds. However, banks can provide finance for genuine working capital requirements of jewellers.
This comes amid significant rise in imports of gold in recent years which is a cause for concern as direct bank financing for purchase of gold in any form could lead to fuelling of demand for gold.