The Reserve Bank of India squeezed gold buyers further on Thursday, ruling out any credit transactions for imports unless they were intended to make jewellery for export, as it looks to rein in a record current account deficit.
The RBI said the restrictions would also apply to imports of gold which do not have a fixed price.
"In other words (authorised dealers and banks) are required to ensure that credit in any form or name is not enabled for import of any form of gold," the bank said.
It added that imports of gold using loans could continue for lending to exporters of jewellery.
Indians, the world's biggest gold buyers of gold, imported record amounts in May, threatening to swell a record current account deficit.
With energy imports crucial to Asia's third-largest economy, the focus has been on curbing gold, the number two item in the import list.
Gold imports hit a record 162 tonnes in May as Indians swooped to take advantage of hefty price falls, rattling the government and the central bank which are keen to rein in a current account deficit which hit an all-time high of 4.8 percent in 2012/13.
Since May, the government has raised the import duty on gold to 8 percent and the central bank has turned the screws on supplies, forcing Indians to use cash only to buy and limiting purchases mainly to jewellery.
But recent falls in global prices to three-year lows have dragged domestic levels lower too, virtually wiping out the duty hike and triggering another upsurge in demand, which is now encountering a lack of supply due to the central bank's moves.
As a result, premiums are up to $20 per ounce above London prices.
In its statement on Thursday, the central bank said imports of gold against both suppliers' credit and buyers' credit would now have to toe the line of 100 percent cash margins. These credits facilitate the funding for gold purchases.
It also said imports of gold on an unfixed price basis also had to be on a 100 percent cash margin basis. Gold imports are usually either based on an agreed, or fixed, price or priced at time of delivery, which is termed "unfixed".