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Reliance Capital becomes first company to suspend gold sales
New Delhi, Jun 21, 2013, (PTI) : 12:23 IST
Amid growing concerns over huge gold imports hurting the country's economic strength, financial services major Reliance Capital today became the first company to suspend gold sales across all its businesses.
The decision includes suspension of sale of gold coins and other physical forms of the yellow metal, as also as an investment product across all its businesses and subsidiaries, Reliance Capital said in a statement.
Part of Anil Ambani-led Reliance Group, the company said the decision has been taken in view of the government's "publicly stated objective of minimising gold imports that are seriously hurting the country's economic interests".
According to industry watchers, more companies are expected to follow suit with similar measures, as rising gold imports continue to burden the country's current account deficit.
The government has been consistently asking for measures to curb flow of household savings into idle assets like gold and channelise these funds towards financial market assets.
Besides suspension of gold sales, Reliance Capital's Commercial Finance Division has also decided to suspend financing against gold as a security. Further, Reliance Capital Asset Management (RCAM) has decided to suspend new subscriptions in Reliance Gold Savings Fund. Existing SIP investors will not be affected by this decision.
The fund is estimated to have a total Asset Under Management of over Rs 2,200 crore.
Commenting on the move, Reliance Capital CEO Sam Ghosh said, "Reliance Capital is committed to support all policy objectives of the government and the RBI.
"We sincerely hope that all stakeholders across business, trade and industry will act in a responsible manner to minimise gold imports that have placed an unbearable burden on the Current Account Deficit (CAD), and are severely hurting the country's growth prospects," he added.
The suspension would also apply to supply of gold coins by Reliance Capital for sale through India Post, the company said.
India is estimated to have imported 860 tonnes of gold in 2012 and the figure is expected to cross 900 tonnes this year.