Gold price rise a concern? Here's what FM Nirmala Sitharaman and RBI Governor said

Union Finance Minister Nirmala Sitharaman on Monday said that all gold available in the domestic market is imported and that the government is closely monitoring prices amid rising concerns.

She said the current condition of gold prices is a matter of concern and is being watched carefully by the authorities. Addressing the Central Board of Directors of the Reserve Bank of India at the customary post-Budget meeting, the Finance Minister said it would be premature to comment on the economic impact of the Indo-US trade deal or recent US tariff developments.

She said the Commerce Ministry is reviewing the situation, and further negotiations will be decided by the concerned delegation.

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RBI on Gold, Securities, and Financial Stability

On gold prices, officials indicated that global developments, including central bank purchases of gold and silver, have contributed to the recent rise. Sanjay Malhotra said that gold and silver prices have increased partly due to buying by several central banks.

The Governor also clarified that the reduction in US securities holdings was undertaken only due to dollar valuation changes. He said there was no other underlying reason for the move.

On financial stability, Malhotra said banks in India currently have a capital adequacy ratio of 17 per cent. He added that even if no fresh capital is raised over the next five years, banks would still be able to meet their capital requirements.

He also said that more than Rs 1 lakh crore of foreign direct investment was infused into banks in the past year.

RBI on Inflation, Margin Trading and Bank Fraud

On inflation, the RBI Governor said that changes in the methodology for calculating the Consumer Price Index (CPI) would require corresponding adjustments by the central bank. He said the RBI will consider necessary changes in its April monetary policy.

Regarding the margin trading facility (MTF), Malhotra said the decision was taken after stakeholder consultation, and there is currently no proposal to review or change the framework.

On a reported Rs 590 crore fraud at IDFC First Bank, the RBI Governor said, “As a policy, we do not comment on any individual bank or regulated entity. We are watching the development. There is no systemic kind of issue.”

SEBI Initiatives and Regulatory Reviews

Meanwhile, Securities and Exchange Board of India Chairman Tuhin Kanta Pandey said SEBI and RBI are jointly working on developing a corporate bond index and related products to be traded on exchanges.

"SEBI and RBI are jointly working on developing a corporate bond index and related products, which will be traded on exchanges. It will have RBI and SEBI jurisdiction. We are moving positively forward in this initiative,” he said.

Pandey added that SEBI is reviewing the LODR settlement and portfolio management services (PMS) regulations with a focus on rationalisation based on industry and investor feedback.

He also said the regulator has received representations from brokers seeking relief from RBI guidelines related to collateral and bank guarantees for proprietary trading.