Supreme Court orders end to gold syndicate in Nepal

Kathmandu, November 27 — The Supreme Court has issued an order to eliminate the syndicate system in the distribution of gold imported by commercial banks.

This decision comes in response to a writ petition filed against gold and silver trade associations and federations, alleging that they imposed a syndicate in the name of gold distribution. The court has ordered that traders be allowed to purchase gold directly from commercial banks.

The bench of Justices Nahakul Subedi and Til Prasad Shrestha has issued an interim order to the Nepal Rastra Bank (NRB), allowing traders to buy gold directly from commercial banks even if they are not affiliated with any trade association or federation. This order follows the fulfillment of other procedures stipulated under the "Procedure on Gold Sale and Distribution, 2011."

Previously, gold traders were required to be members of federations such as the Federation of Nepal Gold and Silver Dealers' Association to purchase gold.

Non-members were effectively barred from accessing imported gold. This rule was criticized for creating a monopoly, as federations allegedly misinterpreted regulations to impose a syndicate.

The interim order, issued in response to a petition filed by Sagar Dhungana on behalf of Shri Riddhi Siddhi Jewelers, now allows traders to purchase gold directly from banks without needing federation membership.

The court noted that restricting gold purchases to traders affiliated with federations infringes on their constitutional right to conduct business. It instructed the Nepal Rastra Bank to ensure that traders who meet the required procedural criteria under the "Procedure on Gold Sale and Distribution" can purchase gold without discrimination.

Trader Narendra Gupta, who has long opposed the syndicate system, welcomed the decision, calling it a halt to unlawful practices.

This ruling is expected to make the gold trade more inclusive and transparent, benefiting independent jewelers and traders.