Now four more banks are permitted by India's Central bank to import precious metals. The move is expected to enhance the competition and help reducing premium in the world's biggest importer of gold, reported Reuters.
According to the data on the website of Reserve Bank of India, City Union Bank, Bank of Maharashtra, Yes Bank and ING Vysya Bank, are added to the list of 35 banks that are now allowed to import gold and silver.
A Singapore-based bullion dealer, "It's not because they foresee huge demand coming up. They are just trying to open up for more competition in the market and customers will have more choices."
The federal government allows only the private-sector banks and the state-run bank to trade in gold as India regulates bullion tightly. Rajesh Exports, Gitanjali Gems and Titan Industries are the jewelers that are allowed to import precious metals apart from banks.
Coins and bars are sold by banks through retail outlets after a premium has been charged over the London prices. The festive season in October witnessed mere peak of $3 in premium and it remains to $1.5 since then.
Pinakin Vyas, Assistant Vice-President with gold importing IndusInd Bank, Mumbai, said, "Competition ultimately creates transparency to the price."
According to the Bombay Bullion Association (BBA), the gold import of India has reduced from 958 tonnes in 2010 to 878 tonnes in 2011 due to record breaking soaring price.
The trade body, BBA expects that imports will halve in the first quarter of 2012 due to Slow Indian economy hitting incomes.