Print Edition - 2015-07-29 | MONEY
Gold in short supply as banks suspend imports
Jul 28, 2015-
Nepal’s bullion market is running short of gold as banks have not been importing it from the beginning of the fiscal year after encountering a drop in demand.
According to the Nepal Bankers’ Association (NBA), Sanima Bank was the last to import the yellow metal before the last fiscal year ended.
Banks said demand for gold had been growing lately, but they had stopped importing it due to a slowdown that continued till two weeks ago. Bullion traders preferred to buy gold from unofficial importers as their prices were lower, leaving banks with unsold stocks.
After the government slashed customs duty on gold, there has been a sudden rise in demand for gold from traders. Moreover, a sharp drop in global and local prices has set off a rush among customers to buy the precious metal.
NBA President Upendra Poudyal said that banks were running out of the gold as they had not imported it for more than two weeks. “Banks had suspended the import of gold due to low demands from traders, but demand has swelled lately,” he said, adding that banks would now start importing the precious metal.
According to the NBA, local banks had 200 kg of gold in stock as of last Friday. Only commercial banks are allowed to import gold in the country on a big scale while returning migrant workers are allowed to bring up to 50 gm of gold each on their person.
The Federation of Nepal
Gold and Silver Dealers Association (Fenegosida) said that demand for gold had jumped to 50 kg daily against the usual 15-20 kg daily.
Most traders said that they had been unable to fulfil the requirement of their customers. The price of yellow metal dropped to a four-year low of Rs48,000 per tola on Monday due to a cut in the import duty and a downward trend in international markets.
Kedar Gupta, owner of Shree Riddhi Siddhi Jewellers at Bishal Bazaar, complained that banks were hesitating to provide gold when demand had jumped although they had adequate stocks. “I deposited Rs1 million with one of the commercial banks to buy gold, but it didn’t provide me any although I was ready to pay Rs48,500 per tola.”
Similarly, Baban Kumar Agrawal, owner of Jai Mata Di Gold Palace, Bishal Bazaar, said, “Demand has doubled since last week. As banks have not been supplying new gold, we have been using recycled gold from the past few days.”
Tej Ratna Shakya, special member of Fenegosida and proprietor of Tejmin Jewellery on New Road, said that they had not been able to fulfil orders for jewellery due to the shortage.
“Customer flow has been increasing following the drop in the prices, but we don’t have enough gold to sell even to our regular clients,” he said. Shakya added that some traders had pulled down their shutters as they went out of stock.
Archana Tiwari from Maharajgunj who was in Bishal Bazaar to buy gold said that her regular gold shop was fresh out of stock. “The shelves were empty and only some ordered ornaments were seen there,” she said. She complained that traders might be hoarding gold as the price has dropped to a record low. “It seems traders are hoarding gold with the intention of selling it when prices increase,” she added.
According to the NBA, commercial banks imported 1,700 kg of gold in the last fiscal year, which is very low compared to the quantity they are allowed to buy. They can import 15 kg daily and Nepal Rastra Bank increases the limit to 20 kg daily during the festive period.
The usual requirement of gold stands at 20 kg per day, said traders. Bankers have been complaining that traders often buy smuggled gold, but its use is expected to drop as the margin between imported and smuggled stocks will be narrowed with the cut in customs duty.
Published: 29-07-2015 08:59