NRB Gov for ceiling on individual gold stock

KATHMANDU, JAN 12 -

With the local bullion market facing a shortage of gold, Central Bank Governor Yubaraj Khatiwada on Friday said that the government should fix the ceiling for individuals to maintain stock of the precious yellow metal.

“The government should fix the maximum stock of 100 tola (1,166.4 grams) for individuals and impose heavy duty on additional stock,” Khatiwada said. He was addressing the 21st annual general meeting of the Nepal Gold and Silver Dealers’ Association (Negosida). He said the trend of hoarding gold has increased among tax evaders, people who do not want to disclose their sources of income, smugglers and even general people.

The central bank has currently imposed quantitative restrictions on gold imports, allowing commercial banks to import and sell only 15 kg of gold a day in the local market. However, citing a short supply, the bullion traders association has long been demanding the government increase the import size or allow them to import the metal.

Khatiwada said that once the government puts in place the system of requiring individuals to declare the stock, people will start selling the metal. He also said that there is a need to find out if the current shortage is “physical or artificial.”

Bullion traders said investors getting attracted to gold is natural as doing business in a situation like this in the country is tough.

“As an impact of the international trend, Nepalis have also started buying gold as an investment,” said Tej Ratna Shakya, the president of Negosida. He said the quota system imposed by the government has led to malpractices, resulting in the shortage of the precious metal among real dealers and retailers.

In the programme, local bullion dealers demanded the government increase the import quota to at least 30 kg a day. The government had enforced quantitative restrictions in gold import, citing the Balance of Payment (BoP) deficit in 2010.

However, Vice-president of the the Federation of Nepalese Chambers of Commerce and Industry (FNCCI) Pradip Jung Pandey questioned the impact of gold imports in the country’s export sector.

Nepal Bankers’ Association (NBA) President Rajan Singh Bhandari urged bullion dealers to make gold products competitive to boost export and also assured support from banks in their export/import business.

“The BoP deficit has indicated a necessity of regulating the bullion market as there was growth in the import and negligible export of gold items,” he said.

Meanwhile, the central bank, the FNCCI and the NBA suggested all bullion traders to stand united and form a single umbrella organisation.

Currently, Negosida and three other associations—Nepal Gems and Jewellery Association, Nepal Gold and Silver Artist Association and Nepal Gold-Silver Craft Business Association—are in the race to form their separate supreme body.

Through its annual meeting on Friday, Negosida decided to establish a federation of bullion dealers and formed an ad hoc committee to this effect. It has support of 45 district associations.

Source: The Kathmandu Post