Central Bank of India has issued a warning to its retail customers in the country that its monetary policy is at risk due to a lack of demand for the RBI’s gold coin.
On December 2, the RBI had announced that it would start printing the 1.5kg gold coins to address the inflationary pressures it faces.
The RBI is currently on pace to meet its target of raising its gold coin production to 1.65 tonnes.
But it was unable to meet the target due to lack of cash demand, and the currency is currently at record lows of around Rs 5,200 per coin.
This is the first central bank to issue such a warning in the last four years.
The central bank issued the circular to its customers, which were informed by the RBI Governor, that the bank would issue the coins “at regular intervals” if demand did not increase.
“We are facing a liquidity crunch in the market.
If you do not get cash from the RBI, the government will impose a cash crunch and you can be left with nothing,” said one person.
Another person, who did not wish to be named, said the circular was not meant for the entire population, but only the people in the poorest households.
“You cannot take gold coin as a gift and expect people to buy it for themselves,” he added.