The Reserve Bank of India (RBI) has lifted its ban on letters of credit (L/Cs) for gold imports.

The reintroduction of L/Cs for gold imports is part of the RBI's lifting of its ban on all lending against gold imports.

Welcome move

The RBI introduced the L/C ban in August 2013 in its efforts to diminish gold imports to tackle a ballooning current account deficit.

The reinstatement of L/Cs in the marketplace has been received well by importers who have complained of cash flow difficulties caused by the ban.

More easing

An arrangement whereby importers had to re-export 20 per cent of the gold they bought from abroad has also been rescinded and a ban lifted on imports of gold coins and medallions.

Domestic sales of gold within India must however still be made on up-front cash payment terms.

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