Gold-buying on the rise, formally imported gold remains unsold at banks
KATHMANDU, Aug 22: With the festive season around the bend, customers are buying gold ornaments to make the celebration more special. But the gold that they buy could have entered the country through illegal routes.
Though gold imported by 'A' class commercial banks -- the only authorized institutions to import the yellow metal - remains unsold for months, jewelers are doing brisk business ahead of the festive season. Officials say most of the gold demand in the Kathmandu Valley is met by smugglers. The growing frequency of gold seizure at Tribhhuvan International Airport (TIA) and customs offices suggests that gold smuggling into the country is on the rise.
A total of 36 kg of gold was seized from different customs point in the last fiscal year, while customs officials had seized 80 kg of gold in 2014/15, according to the Department of Revenue Investigation (DoRI). Going by the statistics, TIA and Rasuwagadhi are the most popular points for gold smuggling. Smugglers seemed to have turned to Rasuwagadhi after the Tatopani route was shut down after the earthquake of April 2015.
The government charges customs duty of Rs 4,200 per 10 grams of gold. A kilogram of gold imported through formal channel costs around Rs 5.2 million. However, the yellow metal is available at around Rs 4 million per kg in the grey market.
Slowdown in gold sale by banks has left government officials perplexed. “Banks have 371 kg gold in stock. They have not received any significant demand in the past three months,” Sishir Dhungana, director general of Department of Customs (DoC), told Republica.
Nepal had imported 6.2 tons of gold in 2013/14. However, gold imports fell to only around 3.5 tons in first eleven months of the last fiscal year.
“We are keenly watching the market as jewelers are doing business even though gold is lying unsold at banks,” Dhungana added.
DoR and DoRI recently held a discussion with jewelers on the issue. Jewelers said in the meeting that they were buying less gold from banks as they are getting more sellers than buyers in recent months.
“Many people are coming to sell their gold ornaments, particularly after the earthquake of 2015. That is why jewelers are not buying gold from bank,” Mani Ratna Shakya, president of Federation of Nepal Gold and Silver Dealers Associations, told Republica.
However, a snap survey of 10 jewelry shops conducted by Republica shows otherwise. Number of buyers was more than sellers in all those shops.
Shakya admitted, saying that the number of buyers is growing in recent days as major festivals are around the bend. He also said daily demand has surged to about 17 kg per day compared to 12 kg a day couple of weeks ago.
Trilochan Pangeni, the spokesperson for Nepal Rastra Bank, said banks were not getting buyers for gold as gold supplied by banks are comparatively expensive. Asked about smuggling of gold, Pangeni said: “We cannot put blame on others without any proof. Also, we do not have record of gold brought into the country by individuals.”
An individual is allowed to bring up to 5 tola (11.164 grams) of gold ornaments. The government barred individuals from bringing raw gold from July 16.
Does a college degree still matter?
