Gold shortage: Banks accused of selling gold haphazardly
KATHMANDU, FEB 01 -
Bullion traders have accused commercial banks of selling gold arbitrarily whereby a majority of traders have been deprived of the previous yellow metal.
Nepal Gold and Silver Dealers’ Association (Negosida) will meet Nepal Bankers’ Association (NBA) on Wednesday to discuss the issue.
The government has imposed limit on gold import at 15 kg per day since November 2010, and only commercial banks have been allowed to import the precious metal.
Currently, 13 commercial banks import gold on a rotation basis as per the NBA recommendation. A bank imports 50 kg in one consignment. They are allowed to sell 1 kg gold per day per dealer.
Bullion traders say the local market is experiencing gold shortage as some banks are selling their entire consignment of 50 kg on a single day. “None of the banks have gold in stock and this shortage will continue until this weekend,” said Manik Ratna Shakya, general secretary of Negosida. “The shortage in this wedding season is hampering our business as well as encouraging anomalies in the market.”
He added that they will ask NBA to make the distribution uniform.
Bankers, however, say the present crisis is due to a stiff fall in supply of the metal compared to the market demand. “Demand for gold is high, but supply is less,” said a bank CEO. “If 50 dealers line up at our office each seeking a kg of gold, our one consignment is sold on a single day.”
According to Negosida, the current market demand for gold stands at 40 kg per day.
Negosida has dispatched letter to NRB, seeking a hike in gold import ceiling as well as demanding that they be allowed to import the metal through open general licence (OGL). “But the central bank is yet to respond to our demand,” said Shakya. “We have even asked NRB to increase supply on a seasonal basis if it cannot do it on a regular basis.”
NRB officials said the issue was under consideration and will be discussed at NRB’s upcoming board meeting.
However, the gold import ceiling less likely to be increased as NRB Governor Yuvraj Khatiwada is against the idea. Khatidawa, a few weeks ago, had said the import of gold cannot be raised at a time when the country is failing to encourage people for investing in more productive sectors.
Source: Republica
