Surprisingly, this capital-intensive business with potentials of huge money changing hands operate without adequate scrutiny from the government agencies. Many of them are in fact not even registered with required government departments.[break]
Around 25 percent of the gold stores operating in the valley are said to be doing business by just having a tax registration and without registering the business at the Department of Commerce (DoC), Office of the Company Registrar, and Cottage and Small Scale Industries.
The emergence of the yellow metal as a better investment option due to the downturn in the share market and the crisis of confidence sprouting in the banking sector is drawing more investors toward gold in the domestic market as well as increasing unauthorized operation of stores.
Tej Ratna Shakya, president of Nepal Gold and Silver Dealers´ Association (Negosida), told Republica that around 25 percent of gold stores in the valley may be in existence without fulfilling legal requirements with just a tax registration. As per the Company Act, for any gold shop to conduct business in the valley, it should have a registration certificate from DoC, Office of the Company Registrar, and Cottage and Small Scale Industries.
When asked about the operation of such unlawful gold stores in the valley, DoC said it has not monitored the operation of gold shops so far and could not comment on the existence of such stores. "Conducting business with just a tax registration is absolutely unlawful. They should be registered with DoC, Office of the Company Registrar, and Cottage and Small Scale Industries, Eka Dev Adhikari, section officer at DoC.
According to the data provided by Negosida, 42 new gold shops have opened shops in the valley alone in a span of three years.
"The increase in the price of the yellow metal by almost 33 percent this year has given much ground for gold shops to sprout in the market due to the huge profit involved as well as for security of investment," Shakya said adding that there are altogether 300 gold shops registered with the association while there must be over 600 shops operating in the valley alone.
"At a time when Nepal Rastra Bank is supplying only 15 kilograms of gold on a daily basis to the traders, the surge in the number of gold stores in the valley is driving illegal gold trade," Shrestha added.
He said many of the new shops coming up don´t even possess proper knowledge about the precious metals and this in fact is pushing the sale of low quality ornaments.
Likewise, the trend of importing goldsmiths from neighboring country for manufacturing gold ornaments is inviting a loss in revenue to the tune of Rs 4 billion annually.
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