PAN must for high-value gold buy: RBI panel

Seeking to check demand for gold, a RBI committee today proposed a slew of measures like mandatory quoting of PAN numbers for high-value purchases, restriction on gold loans and check on NBFC branches dealing with gold loans.

The Reserve Bank committee also suggested cheque payment for gold purchase beyond a threshold, introduction of other savings products to discourage investment in physical gold, prohibition of bank finance for buying gold and revival of the two-decade old proposal to set up a Bullion Corporation.

"There is a need to moderate the demand for gold imports considering its impact on the current account deficit," it said, adding that RBI may impose limits on volume and value of gold import by banks under "extreme situation".

Currently, banks account for about 60

per cent of the total gold import.

It suggested that NBFCs may obtain a copy of PAN Card in all the loan proposals exceeding Rs 500,000 per borrower to strengthen mechanism of KYC. Currently, PAN card is mandatory for jewellery purchases beyond Rs 500,000.

The committee underlined the need for continuous monitoring of rapid growth of assets, borrowings, and branch network of gold loan NBFCs, while making a case for reviewing fund raising by them.

The recommendations include making use of idle gold reserves, which is about 20,000 tonnes, by setting up a gold bank and using the reserves of exchange-traded funds to productive use, but said there was no case for granting gold loan NBFCs a status at par with banks.

Giving its rationale for setting up a gold bank, the report said, "The proposed gold bank may be given powers to import, export, trade, lend and borrow gold and deal in gold derivatives."