RBI mulls alternative financial instruments to gold

Kolkata, July 12 (IANS) The Reserve Bank of India (RBI) is mulling floating financial instruments that mimic returns on gold to curb the current account deficit, Deputy Governor Anand Sinha said Thursday.

Gold imports have contributed substantially to India's current account deficit (CAD), which is the difference between total imports and transfers and total exports, which widened to the highest ever level to 4.5 per cent of the gross domestic product at $21.7 billion in January-March period of 2011-12.

"Gold imports have been a very substantial part of the current account deficit. Therefore, it is being looked at what best can be done. Import is one aspect, the other aspect is that the gold that is already existing in the country can be brought out to satisfy the demand by devising financial instruments which can mimic the returns on gold," said Sinha.

"Several proposals are there. There is a committee which is looking into all these aspects," he told reporters on the sidelines of a programme organised by the Indian Chamber of Commerce (ICC) here.

The central bank, however, has no plan to ban gold coins, Sinha added.