India to monetize gold?

With India's gold imports having pressured its current account deficit (CAD), two large Indian public sector banks have suggested that there is a greater need to make use of gold available in the country, and that the precious metal should be made more liquid. A government official has seconded the move, laying bare some aspects of the government's intention to monetise the gold stores held in most households across the country.
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Government official, the Union financial services secretary GS Sandhu, said the government is actively looking into the issue of monetising gold, following representations from the banking sector.

Sandhu stressed the need to monetise gold held by the public to help reduce imports of the yellow metal, which are a drain on the nation’s foreign exchange resources, and leads to a wider CAD.

"So much gold is lying idle (within the country). In some ways if we can monetise this, maybe our imports will come down drastically. Something in that direction will have to be thought of," said Sandhu, at an event organised by the Gems and Jewellery Export Promotion Council in Mumbai on Saturday.

"Gold is after all a store of value. Is it possible for the regulator to treat a bit of our gold deposits as CRR or SLR, instead of cash or government securities?", asked SBI Chairperson Arundhati Bhattacharya. She was speaking at the same event.

She added that given the current situation, there was a "greater need to make use of gold available in the country, and make it more liquid."
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