"During April-January, 2007-08, imports of gold and silver grew by 22.7 per cent (35.1 per cent a year ago). The moderation witnessed in the growth of gold and silver imports was under the impact of high and volatile international prices of gold. According to the World Gold Council (WGC), gold prices in US dollar terms (London pm fix) were higher by 21.9 per cent during 2007-08, on the top of the rise of 31.9 per cent during previous year."

Now this:

MUMBAI: Bullion traders are a worried lot. This comes on the back of the Reserve Bank of India (RBI) not renewing the licence of banks to import
silver. At the end of each year, the central bank issues a circular, wherein they give a licence to banks to import gold and silver simultaneously.

This year has been a little different. While the licence to import gold was renewed as a part of the normal process, silver, however, has run into a bit of a problem with its licence yet to be renewed. No reason has been cited by the RBI so far for the licence for silver not being renewed.

Banks such as Nova Scotia, ICICI Bank, Kotak Mahindra, Punjab National Bank and Union Bank of India are the banks through which silver is imported into the market.

Silver can also be imported through nodal agencies like Minerals and Metals Trading Corporation (MMTC) and State Trading Corporation (STC). “RBI has asked for a separate application from banks to import silver, and it should approve it soon,” says Suresh Hundia, president, Bombay Bullion Association.

A dealer with a foreign bank confirmed that RBI has asked for a separate application for the licence renewal. For importing silver, one has to route the request through the customs officer who, in turn, asks for the relevant licence from RBI. With the licence from RBI still waiting approval, banks are left with little choice but to be hesitant in taking silver indents from customers.

All this has left silver dealers a worried lot. “Banks are not placing indents with overseas suppliers,” says a Chennai-based bullion dealer. This makes it difficult for dealers to make a commitment on delivery to ornament manufacturers and retailers since they are not sure of supplies from banks.

All this could lead to a disruption in silver manufacturing operations. “We are assessing the situation and do not want to flout RBI guidelines,” says another dealer with an Indian bank.

The options left to those in the business — silver dealers in particular — are fairly limited. The only apparent way out is to import silver through MMTC and STC. However, these establishments do have their own credit limits with overseas suppliers and are not in a position to meet the entire the demand for imported silver. It is estimated that India consumes about 3,000 tonnes of silver every year.