Kathmandu, July 31

Banks have refrained from importing gold since almost three weeks citing the plummeting demand of the precious yellow metal in the domestic market.

As the demand for gold from bullion traders has come down significantly in the recent weeks resulting in increasing stock of raw gold with banks, they have halted import of gold since the first week of July, informed Anil Sharma, executive director of Nepal Bankers’ Association (NBA) — the umbrella body representing country’s commercial banks.

The demand for gold has gone down in the domestic market especially due to its rising price. In the last two months, gold price has increased by Rs 5,900 per tola to Rs 65,400 a tola today. Traders say that rise in price of gold has deterred potential jewellery shoppers since the last few months.

“Banks were able to sell 570 kg of gold to traders in between mid-May to mid-June. However, as the demand plummeted significantly, they were able to sell only 26 kg in the period between mid-June to mid-July that resulted in gold being piled up at the banks,” informed Sharma.

As per him, 16 commercial banks have 570 kg of gold in stock today.

As traders are not allowed to import raw gold on their own, 16 commercial banks have been importing raw gold and selling to traders. As Nepal Rastra Bank (NRB) has set the import quota of gold at 20 kg per day, these commercial banks import gold on turn-wise basis.

Meanwhile, Mani Ratna Shakya, former president of Federation of Nepal Gold and Silver Dealers’ Association, said that customers have been avoiding jewellery outlets at present and waiting for the price of gold to fall.

“Along with the rise in gold price in line with its international price, recent rise in import duty on gold has further made gold dearer in the local market, thereby discouraging customers to purchase gold jewellery,” said Shakya.

The government, through the budget for fiscal year 2019-20, had increased the import duty of gold by Rs 800 per 10 grams.

Consequently, gold importers now have to pay import tax worth Rs 5,000 per 10 grams, against Rs 4,200 per 10 grams earlier.

Jewellers have said that the daily demand for raw gold in the domestic market today hovers at less than 10 kg, while its demand was above 30 kg a few months ago.

Along with rise in price, bankers said that the increasing flow of gold from illegal channels has brought down gold sales from the banking channel in the recent years.