Indian banks have temporarily suspended fresh imports of gold and silver after delays in receiving annual government approvals, disrupting bullion flows into the country, and raising concerns over supply ahead of the festive buying season, according to Reuters. 

The disruption is linked to a delay in the renewal of import authorisations issued by the Directorate General of Foreign Trade (DGFT), which permits nominated banks to import precious metals each financial year. The previous approval expired on March 31 and fresh authorisation is yet to be issued, prompting banks to pause new overseas purchase orders, sources told the news agency. 

Hold-up has affected shipments 

The hold-up has also affected shipments already placed, with several tonnes of gold and silver reportedly stuck at customs checkpoints as banks await regulatory clearance. The uncertainty has effectively stalled fresh inflows and tightened domestic supply. 

India is among the world’s largest consumers of precious metals, ranking second after China in gold demand and the largest buyer of silver globally. As the country depends heavily on imports to meet domestic demand, even short-term disruptions can impact availability, premiums and retail prices. 

The timing is especially critical as it comes just ahead of Akshaya Tritiya, one of the most significant occasions for gold purchases in India. Demand typically spikes during the festival, with jewellers building inventories in advance to meet consumer demand. 

If the import disruption continues, retailers may face inventory shortages, potentially pushing up local bullion prices during the peak buying period. 

RBI absorbs ₹2 lakh crore liquidity 

Separately, the Reserve Bank of India (RBI) on Friday absorbed ₹2,00,031 crore of transient liquidity from the banking system through a seven-day variable rate reverse repo (VRRR) auction. 

The central bank received bids worth ₹2,28,098 crore against the notified amount of ₹2 lakh crore. It accepted bids at a cut-off rate of 5.24 per cent and a weighted average rate of 5.23 per cent. 

System liquidity is currently estimated to be in surplus of around ₹4.09 lakh crore. Earlier, on April 10, the RBI had conducted a similar seven-day VRRR auction, absorbing ₹2,00,041 crore, which matured and was infused back into the banking system on Friday.