The import of silver has soared after the open general license (OGL) system

KATHMANDU, FEB 11 -

The import of silver has soared after the open general license (OGL) system was implemented on Dec. 27 leading the central bank to suspect that it is being reexported to India to obtain Indian currency with which to import gold illegally.

Despite Nepal Rastra Bank’s urgings, the government had introduced new guidelines permitting silver imports through the OGL system. As per the guidelines, any authorised gold and silver dealer can import silver without any quantitative restrictions.

NRB had suggested to the Ministry of Commerce and Supplies to limit silver imports to 200 kg per day and assign commercial banks to handle its importation. The new provision allows commercial banks to import 15 kg of gold per day.

“We have received reports that silver is being imported in excessive amounts after the OGL system,” said Chinta Mani Shiwakoti, director of NRB’s Foreign Exchange Department.

An estimated 200 kg of silver is consumed by the domestic market daily. NRB has adopted a wait and see approach before taking any new decision. “We found that silver imports had increased significantly within 18 days of OGL,” said Shiwakoti.

According to the Department of Customs, 9,681 kg of silver worth Rs 658.61 million has been imported in the last 25 days, almost double the figure for the period mid-December to mid-January.

“The import of silver has increased heavily in the last one month,” said Nawaraj Bhandari, director general of the Department of Customs. He added that gold imports had been lower than expected with only 150 kg of the yellow metal entering the country after the new provision.

Banks had been expected to import 450 kg of gold monthly. After bullion traders were seen to be disinclined to buy gold imported by them, NRB is preparing to recommend to the Ministry of Commerce and Supplies to revise the guidelines. “We will carry out monitoring for some time and collect data on silver imports,” said Shiwakoti. “If the situation doesn’t improve, we will ask the government to correct the OGL provision.”

However, the Nepal Gold and Silver Dealers Association (NEGOSIDA) said that the import of silver had gone up recently because of the prolonged ban on the import of gold and silver and the increased trend among traders to maintain larger stocks. The government had forbidden the import of gold and silver for about four months.

“Demand for silver has increased in the domestic market as it has been enduring short supplies for a long time,” said NEGOSIDA president Tej Ratna Shakya. He added that traders had increased their stocks fearing possible shortages, and that imports were expected to drop from next month.

Posted on: 2011-02-11 09:06
Source: RAMESH SHRESTHA ,http://www.ekantipur.com/2011/02/11/business/central-bank-baffled-by-surge-in-silver-imports/329437.html