Gold Monetization Scheme To Be Launched Soon: Modi | SupportBiz

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Gold Monetization Scheme To Be Launched Soon: Modi

 
Gold can be converted from dead money to an economic force, says Modi
The gold monetisation scheme will be launched in the coming weeks, Prime Minister Narendra Modi announced on Sunday.
 
"We have brought gold monetisation scheme and will launch it in the coming weeks before Diwali and Dhanteras, when gold is particularly sought after," Modi said in his monthly radio programme of "Mann Ki Baat".
 
"Gold can be converted from dead money to an economic force. To leave gold lying as dead money is behaviour not in sync with the modern times," he said.
 
Noting that accumulating gold as a form of economic security is deeply rooted in India's social tradition, Modi exhorted people to help convert gold to the nation's economic strength by joining in various schemes to be launched soon.
 
Earlier in the week, the Reserve Bank of India issued norms for implementation of the gold monetisation scheme, under which customers can deposit their gold in banks and earn interest on it.
 
The minimum deposit required will be 30 grams of gold with fineness measuring 995. It could include raw gold in the forms of bars, coins and jewellery, excluding stones and other metals.
 
On maturity, the principal and interest will be linked to the prevailing price of gold at the time. The depositor will have the option to take gold or equivalent rupees.
 
The GMS will replace the existing Gold Deposit Scheme, 1999. However, the deposits outstanding under the Gold Deposit Scheme will be allowed to run till maturity unless the depositors prematurely withdraw them.
Resident Indians (Individuals, HUF, Trusts including Mutual Funds/Exchange Traded Funds registered under SEBI (Mutual Fund) Regulations and Companies) can make deposits under the scheme.
The minimum deposit at any one time shall be raw gold (bars, coins, jewellery excluding stones and other metals) equivalent to 30 grams of gold of 995 fineness. There is no maximum limit for deposit under the scheme. The gold will be accepted at the Collection and Purity Testing Centres (CPTC) certified by Bureau of Indian Standards (BIS) and notified by the Central Government under the Scheme. The deposit certificates will be issued by banks in equivalence of 995 fineness of gold.
 
The principal and interest of the deposit under the scheme will be denominated in gold.
 
The designated banks will accept gold deposits under the Short Term (1-3 years) Bank Deposit (STBD) as well as Medium (5-7 years) and Long (12-15 years) Term Government Deposit Schemes. While the former will be accepted by banks on their own account, the latter will be on behalf of Government of India. There will be provision for premature withdrawal subject to a minimum lock-in period and penalty to be determined by individual banks.
 
Interest on deposits under the scheme will start accruing from the date of conversion of gold deposited into tradable gold bars after refinement or 30 days after the receipt of gold at the CPTC or the bank’s designated branch, as the case may be and whichever is earlier.
 
During the period from the date of receipt of gold by the CPTC or the designated branch, as the case may be, to the date on which interest starts accruing in the deposit, the gold accepted by the CPTC or the designated branch of the bank shall be treated as an item in safe custody held by the designated bank.
 
Reserve requirements
The short term bank deposits will attract applicable cash reserve ratio (CRR) and statutory liquidity ratio (SLR). However, the stock of gold held by the banks will count towards the general SLR requirement.
 
KYC to apply
The opening of gold deposit accounts will be subject to the same rules with regard to customer identification as are applicable to any other deposit account.
 
Utilisation of gold mobilised under GMS
The designated banks may sell or lend the gold accepted under STBD to MMTC for minting India Gold Coins (IGC) and to jewellers, or sell it to other designated banks participating in GMS. The gold deposited under MLTGD will be auctioned by MMTC or any other agency authorised by the Central Government and the sale proceeds credited to the Central Government’s account with the Reserve Bank. The entities participating in the auction may include the Reserve Bank, MMTC, banks and any other entities notified by the Central Government. Banks may utilise the gold purchased in the auction for purposes indicated above.
 
The union cabinet approved the scheme last month.
 
The objective of the scheme is to mobilise gold, give a fillip to the gems and jewellery sector by making the metal available from banks on loan and reduce the reliance on imported gold.
 
The scheme was first announced in the 2015-16 budget by Finance Minister Arun Jaitley, to help monetise gold worth nearly Rs.60 lakh crore held by households and institutions.
 
Modi also mentioned the sovereign gold bond scheme, wherein at the time of selling, customers can earn returns according to the current price of gold.
 
Paper gold will eliminate the need to buy physical gold for investment, bringing down the need to safeguard it, the prime minister said.
 
He also said 5- and 10-gram gold coins engraved with the Ashoka Chakra symbol, and 20-gram bullion coins will be issued.
 
According to the World Gold Council, the demand for the yellow metal in India in 2015 was around 900-1,000 tonnes. Total gold imported in 2014 was 891.5 tonnes.