Now, you can't use credit card to buy gold jewellery on EMIs

Last Updated: Mon, Jul 01, 2013 04:16 hrs

After taking policy measures to lower gold imports, the Reserve Bank of India (RBI) has decided to curb retail consumption, too.

It has asked banks not to convert gold purchases done through credit cards into equated monthly instalments (EMIs), besides mandating that cards should not be accepted for purchase of gold coins at branches.

Many banks, especially the ones aggressive in the credit card business, offer EMI facility on purchase of air tickets, mobile phones and gold jewellery. Normally, on any transaction of more than Rs 10,000 value, customers are offered the option of converting the dues into EMIs. Some banks also have tie-ups with merchant establishments for offering more facilities like full or partial waiver of processing fees and interest.

"The central bank does not want banks to encourage gold buy. This has been communicated to us in several interactions. So, we have stopped offering the EMI facility on gold purchases," said retail head of a large foreign bank.

Besides, while the central bank has asked banks not to push gold coin sales aggressively, the finance ministry wants public-sector banks to completely stop such sales. The state-run banks have already implemented it.

Bankers said RBI had held discussions on EMIs offered on outstanding credit card bills for all kinds of purchases and would soon come out with specific guidelines on this. Banks might have to make more disclosures. It was still at the discussion stage, said a senior banker.

Earlier, RBI had also moved to curb loans against gold coins. It had asked banks not to lend against gold coins weighing over 50 g.

These actions, besides the recent increase in import duty on gold, are part of the drive of RBI and the government to lower the demand for the yellow metal so that its import can be brought down.

The norms for gold imports had also been tightened through restrictions on nominated banks & agencies and premier & star trading houses. Under these, RBI had said, import of gold on a consignment basis would only be for meeting genuine needs of jewellery exporters.

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