The central bank has been resisting continued pressure from bullion traders to increase the quota. Only commercial banks are allowed to import gold. While the central bank is concerned that a hike in the quota would hurt the balance of payments (BoP) like it did four
years ago, bullion traders say the curb in bullion imports has encouraged smuggling to meet the market demand, which stands at an estimated 40-45 kg per day, but reaches up to 50 kg a day during wedding and festive seasons.
The traders said the yellow metal is being traded at a premium of Rs 2,000-2,500 per tola (11.664 gm) amid supply constraints. “The government must increase the quota. The existing quota will badly hit the market that is already facing short supply amid high demand,” said Manik Ratna Shakya, former general secretary of the Federation of Nepal Gold and Silver Dealers Associations (Fenegosida).
The shortage in the market has encouraged illegal trading of gold imported from China. Trader said the gold imported from China was also being smuggled into Indian markets. The four major sources of gold supply for the domestic market include commercial banks, smuggling, recycling of jewellery and duty-free import by individuals (50gm per person).
Manish Pradhan of Asri Jewellers said they have long been asking the central bank to increase the import quota, stating that low supply has offered black-marketers a space in the market.
The central bank, however, has hinted that there could be a revision in the quota. NRB Spokesperson Bhaskar Mani Gnawali said the central bank could reconsider the quota to increase it to 20kg per day again. “If there is necessity, and concerned stakeholders make requests, the central bank can reconsider its decision,” he said. NRB said banks imported gold work Rs 6.29 billion in the first trimester.
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