Kathmandu, January 30

For the first time since imposing the gold import limits in 2011, the government is set to increase the daily import quota of yellow metal by five kilograms in view of increasing demand of the precious metal in the domestic market.

Nepal Rastra Bank (NRB) — the central monetary authority — is preparing to hike daily import quota of gold for commercial banks to 20 kilograms round-the year and up to 25 kilograms during wedding season (mid-January to mid-March), according to Chinta Mani Siwakoti, deputy governor of NRB.

“NRB will soon issue a circular raising import quota of gold for banks,” said Siwakoti.

Currently, government allows commercial banks to import up to 15 kilograms of gold every day. Only commercial banks are authorised to import raw gold in the country, which they then sell to domestic jewellers.

The government had come under immense pressure from the domestic jewellers in the recent days to increase import quota of gold. Citing that the mismatch between domestic demand and officially supplied gold had resulted in acute shortage of raw gold in the market, jewellers had threatened to shut shop if the import limit of gold was not raised.

Last week, the Ministry of Supplies (MoS) recommended NRB to hike import quota of gold.

Though jewellers claim that daily demand of raw gold in the domestic market skyrockets to more than 45 kilograms during wedding and festive seasons and normal demand hovers around 25 kilograms, the government does not have official data on actual demand of the yellow metal in Nepal.

Since the import quota was implemented in 2011, NRB used to increase the quota by five kg to 20 kg during festive and wedding seasons and reduces it back to 15 kilograms at normal times.

Wedge

Month

2015

2016

January

1.6 %

6.4%

February

1.6 %

6.1%

March

1.7%

5.4%

April

2%

4.3%

May

2.1%

4.2%

June

2%

5.3%

July

1.9%

5.2%

August

3.2%

3.5%

September

2.8%

3.6%

October

3.2%

2.5%

November

5%

1.2%

December

6%

0.4%

“We increase or decrease import quota of gold on the basis of recommendation of the government. That is what we have done this time and we are hopeful that the new import quota will cater to market demand,” Siwakoti said.

MoS officials, on the other hand, say that NRB is responsible to figure out the exact demand of gold in the domestic market.

“MoS does not look into technical aspects and only works at policy level. The disorder in jewellery market is due to the lack of data on official demand of gold with the government. NRB has to figure out the actual demand of gold,” Surya Shrestha, spokesperson for MoS, said.

Lack of official data with the government on demand of gold has not only affected jewellery industry, but also encouraged gold smuggling in the domestic market with a high percentage of gold demand still fulfilled by smuggled gold, as per experts.

Meanwhile, jewellers have welcomed the plan of NRB to increase import quota for gold.

“It would be better if the daily import quota were fixed at 25 kg for whole year. Once government is able to supply sufficient quantity of gold in the market, smuggling of yellow metal could be curbed significantly,” Mohan Kumar Sunar, president of Federation of Nepal Gold and Silver Dealers’ Association said.