MUMBAI: RBI Deputy Governor KC Chakrabarty defended the decision to allow more banks to import gold, saying presence of more players will lead to lower cost and help the country's external balances.

"If there is competition, gold will be imported at a lower cost. Whatever gold will be imported that will be cheaper, to that extent CAD (current account deficit) will improve," he told reporters on the sidelines of an event here.

In a move seen as a precursor to easing restrictions on inward shipments of the metal, RBI has allowed more banks, including Axis Bank, Kotak Mahindra, and IndusInd Bank among others from the private sector space, to import gold.

The government and the RBI had imposed tough measures to control gold imports, one of the primary causes of the current account deficit swelling to a record high $ 88.2 billion in 2012-13.

The government also increased customs duty on gold to 10 per cent from 4 per cent to discourage imports. According to sources, RBI has permitted Axis Bank, Kotak Mahindra Bank, IndusInd Bank and Yes Bank to import gold. These banks received permission to import gold under the 80:20 scheme from the RBI some time ago.

Under the 80:20 scheme introduced on August 14, nominated agencies could import gold on condition that 20 per cent of the shipment would be exported and the remainder kept for domestic use. Permission for subsequent imports would be given on fulfilment of the export obligation.

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