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'Need to educate public about perils of investing in gold'

Press Trust of India / Mumbai 28 Jun 12 | 07:52 PM

Reserve Bank Deputy Governor KC Chakrabarty today said educating the common man about the speculative nature of gold investments is the key to bring down the high import of the precious metal which is straining current account and pulling down the rupee.

"What will bring down gold imports is creating awareness in the society that gold is not a proper investment for the poor. It is a speculative investment. We need to change our culture," he told reporters on the sidelines of a CII-organized banking technology meet here.

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He, however, did not give a direct answer when asked about reports that RBI was contemplating a ban on sale of gold coins by banks.

When asked if such a move will bring down gold imports, he said, "I don't think so."

Gold is seen as a safe haven for parking money given the present gloom in the financial markets. A bulk of its demand is met through imports which is putting stress on the current account deficit and the value of the rupee.

Gold imports stood at 969 tonnes worth $61.5 billion in FY12, according to the World Gold Council.

According to reports, the RBI is planning a reversal of its earlier stance taken when the rupee was relatively firm and may ban sale of gold coins by banks to arrest a fall in the value of the currency (6 percent since January and 30 percent since last August) to keep a tab over the current account deficit, which is likely to touch four percent of GDP in FY12.

Almost all the major banks are into selling of certified bullion to cash in on the growing demand.

Central Bank of India's Chairman and Managing Director M V Tanksale said banks sell gold coins to complete their product bouquets and also because there is a latent demand for the commodity from the people who see it as an investment.

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