The 20:80 gold import scheme, which became a political hot potato recently, has come back to haunt RBI

The 20:80 gold import scheme, which became a political hot potato recently after the Narendra Modi government alleged that this P Chidambaram plan benefitted Nirav Modi, has come back to haunt the Reserve Bank of India. The Central Bureau of Investigation (CBI) on Thursday questioned four senior RBI officials in connection with relaxing of gold import rules in 2014 for a brief period when P Chidambaram was the Finance Minister, PTI reported.

The 20:80 scheme was briefly implemented in May 2014 barely three days before the counting of the general elections by the RBI under the governorship of Raghuram Rajan and was rolled back in six months later in November. The CBI, which is also probing the Rs 13,000 crore bank fraud by Nirav Modi, questioned three Chief General Managers and one General Manager of the Reserve Bank of India (RBI), PTI quoting officials said.

The government had alleged that this 20:80 scheme resulted in a windfall of Rs 4,500 crore to 13 trading houses in six months. However, Raghuram Rajan in an interview last month vehemently defended the scheme as “objective”. The CBI investigation began four weeks after the NDA government informed the public about the scheme and the alleged connections.

The 20:80 scheme, which was introduced in August 2013, was modified in May 2014 allowing major trading houses and star trading houses to import gold. Earlier only state-owned companies MMTC and STC were allowed to import gold. However, Comptroller and Auditor General (CAG) said that during the six-month duration of the 20:80 scheme, 13 trading houses gained massively, which was calculated to be Rs 4,500 crore.

The allegations against the P Chidambaram and Raghuram Rajan came days after PNB fraud was detected. A sub-committee of the Public Accounts Committee headed by BJP MP Nishikant Dubey had reportedly sought details from the Revenue Department on 20:80 scheme and any alleged link with the PNB fraud.