Nepal Rastra Bank (NRB) plans to implement a temporary
provision on gold sales outside Bagmati zone.
It will bar bullion dealers from buying gold with the
recommendation of more than one traders' association. The central bank requires
traders to obtain a recommendation from their association to buy gold from
banks. On Tuesday, NRB fixed the maximum quantity of gold to be sold to traders
affiliated to four associations in response to complaints of haphazard
distribution. However, there will be no change in the distribution system in
"We have completed all the preparations, and we will soon
implement the new provision at the district level for a short period," said the
official. He added that it would help reduce the shortage of gold being felt at
the district level and stop the practice of exceeding the purchase quota by
producing recommendations from several associations.
This new provision for the district market will be
implemented for a one-month period, according to the NRB official. Of the 6 kg
of the gold being released in the districts daily, the Nepal Gold and Silver
Dealers Association (Negosida) will get 65 percent, Nepal Gems and Jewellery
Association (Negja) 25 percent, Nepal Gold and Silver Artist Association
(Negosaa) 7.5 percent and the Federation of Handicraft Associations of Nepal
(FHAN) 2.5 percent for their member traders.
In Bagmati zone, of the total 9 kg of the yellow metal
released daily, Negosida has been getting 50 percent, Negja 30 percent and FHAN
and the Nepal Gold and Silver Artisan Association 10 percent each. The central
bank had also directed the four associations issuing recommendations to submit
a list of their members within a month in a bid to devise a better nationwide
The new provision will hold commercial banks strictly
responsible for following the NRB directive and they will not be allowed to
sell gold from Kathmandu to traders from out of Bagmati zone. Authorised banks
will have to sell 40 percent (6 kg) of their daily quota (15 kg) from their
branches at Birtamod, Biratnagar, Janakpur, Birgunj, Bhairahawa, Nepalgunj,
Dhangadhi and Pokhara.
"The gold distribution system at the district-level market
was chaotic, and the yellow metal was not reaching the actual bullion traders,"
said Tej Ratna Shakya, president of Negosida. He added that even though the
main problem was limited quota for the local market, the new provision would
help make distribution transparent.
As per the central bank's provision, bullion dealers buy
gold from commercial banks as per the recommendation issued by their
associations. However, traders had been found to have become members of many
associations and getting recommendations from them to buy more gold creating a
shortage in the market.