Ex-RBI Governor Raghuram Rajan To Be Questioned In 80:20 Gold Import Scheme?

Former Reserve Bank of India (RBI) Governor Raghuram Rajan could be questioned by the Central Bureau of Investigation (CBI) in the now-defunct 80:20 gold import scheme. Republic TV reported that a questionnaire is being drafted by the agencies to be sent to Rajan soon.

The former RBI Governor will reportedly be given a deadline to respond to the questions with the CBI keeping open its option of questioning Rajan in person.

Rajan had issued an order by the RBI to allow 13 trading houses to import gold in May 2014 under the 80:20 scheme. Former finance minister P Chidambaram had signed the order on 15 May, 2014 – much after the last vote was cast for the Lok Sabha elections that ushered in the Narendra Modi government to power.

The 80:20 scheme allowed imports of gold by an importer only if he/she exported 20 per cent of the gold brought into the country in value-added form. For example, if a firm A imported 10 bars of gold initially, it could import further only if it had exported at least two bars in value-added form like jewellery.

The scheme was introduced in July 2013 to rein in gold imports that zoomed to 165 tonnes – a monthly record – in May after global prices crashed. The United Progressive Alliance (UPA) government came up with this restriction on curbing gold imports as the current account deficit (CAD) rose alarmingly, leading to trade imbalance. The UPA government further tightened imports by raising the import duty to 10 per cent from 6 per cent. Not just that, importers had to produce records of purchases in the previous three years to buy gold from nominated agencies like State Trading Corporation or Metals and Minerals Trading Corporation or banks.

The 80:20 gold scheme has come into focus after the scandal over Punjab National Bank being allegedly cheated by diamantaire Nirav Modi after letters of undertakings broke out.

Meanwhile, financial daily Economic Times reported that former RBI Deputy Governor HR Khan was questioned by CBI in connection with the scheme.