Gold-obsessed consumers will no longer be able to take any loans to for buying gold in any form, including gold jewellery, gold coins, primary gold, gold bullion, units of gold mutual funds and units of gold Exchange Traded Funds.
The decision of total ban on loans for purchasing gold was notified to banks on Monday. The decision was taken by the Reserve Bank of India (RBI) during its October 30 policy meet.
In the notification, RBI said, "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, the central bank still allows banks to give loans to jewelers to help them meet their genuine working capital requirements.
The central bank issued the notification after it was found that there was a considerable increase in gold imports from foreign countries in recent years. The central bank has concerns that direct bank financing for buying gold could lead to further rise in demand for the yellow metal in the country.
According to figures released by World Gold Council (WGC), demand for gold in the July to September quarter jumped 27 per cent year-on-year, despite a 10 per cent increase in the price of the yellow metal.