The Reserve Bank of India has come down heavily on banks authorised to import gold for tying up with non-nominated banks, co-operative banks and non-banking finance companies for gold retailing.

In a circular issued to the banks, it has restricted these banks from such tie-ups for retailing.

It has been observed that select commercial banks have tied up with co-operative banks to boost the volumes of their gold retailing business and promote the product in rural centres.

Therefore, the banking regulator has asked banks to call off such arrangements with immediate effect.

The Reserve Bank of India in the past had authorised banks such as the State Bank of India, ICICI Bank, HDFC Bank, UTI Bank, Union Bank of India among others to import gold for sale to jewellery manufacturers, exporters and domestic users.

"To increase the volume in gold retailing business, some of the new generation private sector banks have been partnering co-operative banks. These tie-ups are common in Gujarat, particularly in Surat. The RBI has pulled up these banks," said a senior private sector bank official.

"These tie ups are a clear violation of export-import laws and banking norms. The authorities nominate a bank to conduct gold business taking into account its risk management practices.