statesman news service
MUMBAI, 21 JUNE: Reliance Capital, a part of Anil Dhirubhai Ambani Group, is the first company to suspend trading in gold ~ physical sales as well as investment products ~ across all its businesses and subsidiaries in line with the measures initiated by the government and the Reserve Bank of India to curb import of gold.
Banking circles say they are not surprised by RCap’s decision which spells out Mr Anil Ambani controlled group’s keenness to convert its financial wing into a proper scheduled private bank under the new policy norms issued by the RBI for private businesses to start banks. The gesture may help ADAG to acquire a banking licence. Some other aspirants are likely to come out with such decisions to curb gold consumption.
The CEO of Reliance Capital Mr Sam Ghosh today said the company was committed to support all policy objectives spelt out by the finance ministry and the RBI. “We sincerely hope that all stakeholders across business, trade and industry will act in a responsible manner to minimise gold imports that have placed an unbearable burden on the current account deficit and also severely hurt the country’s growth prospects.”
The all encompassing decision will cover Reliance Capital’s sale of gold coins or in any other physical form including supply of gold coins through India Post, suspension of subscription for Reliance gold savings fund under Reliance Capital Asset Management and Reliance Capital’s commercial finance division that lends money against gold security.
Reliance Capital controls more than Rs 2,000 crore assets under its gold control savings scheme. It is also the largest distributor of gold coins for sale through India Post.
Only SIP (or systematic investment plan) investors will not be covered by today’s decision. The RBI had last month asked banks to stop sale of gold coins or in any other form. The finance minister Mr P Chidambaram has often urged “Indians” not to buy gold as investment. However, some banks who have residual stock of gold coins are still selling them to their customers. It will continue until stocks last.
According to bullion market sources, gold prices fell for the third day in a row today following the US Federal Reserve’s decision to gradually withdraw stimuli since the economy is showing signs of revival. The Fed’s statement has pulled the gold and silver prices down as investors are returning to equities and bonds. Friday’s afternoon gold price was Rs 27,380 per 10 gm a fall of Rs 620. It may decline further, traders at the bullion market say.