Reserve Bank of India gave banks the go-ahead to import gold in bullion form and also allowed them flexibility in extending gold loans.
Removing restriction on import of gold coins and medallions by banks will give jewellers relief and spike gold smuggling, according to Indian media reports today.
India's central bank said, importers accredited as 'Star Trading Houses' and 'Premier Trading Houses' can import gold on 'documents against payment' basis without any end use restrictions.
India put restrictions on gold imports over a year ago as it grappled with a current account deficit that sent the rupee into a free-fall.
Although the price differential between domestic and international gold will continue, the shortage of the yellow metal created due to restriction will now ease. It will also bring down gold smuggling.