New Delhi: Seeking to mobilise idle gold worth up to Rs 60 lakh crore held by households and institutions, government today proposed a new scheme offering tax-free interest on depositing the yellow metal with banks.
The draft gold monetisation scheme also provides for incentives to the banks, while individuals and institutions can deposit as low as 30 gms of gold, while the interest earned on it would be exempt from income tax as well as capital gains tax. The stock of gold in India that is held by people of the country that is ‘neither traded nor monetised’ is estimated to be over 20,000 tonnes, which would be worth about Rs 60 lakh crore at the current market price.
A large amount of gold is also held by temples and other religious institutions. However, the draft scheme does not specifically mention the kind of institutions that would be covered under it. India is one of the largest consumers of gold in the world and imports as much as 800-1,000 tonnes of the metal each year. As per the draft guidelines, a person or institution holding surplus gold can get it valued from BIS-approved hallmarking centres, open a Gold Savings Account in banks for a minimum period of one year and earn interest in either cash or gold units.
The Finance Ministry has sought comments from stakeholders on the draft gold monetisation scheme by June 2. The scheme, which is proposed to be initially introduced only in select cities, was announced in the Budget this year by Finance Minister Arun Jaitley.
“The new scheme will allow the depositors of gold to earn interest in their metal accounts and the jewellers to obtain loans in their metal account. Banks/other dealers would also be able to monetise this gold,” Jaitley had said.The proposed scheme is aimed at monetising idle gold held by households and institutions, provide a fillip to the gems and jewellery sector and reduce reliance on import of the metal over time to meet the domestic demand.
Under the scheme, the bank interest to the customers will be payable after 30/60 days of opening of the Gold Savings Account. “The amount of interest rate to be given is proposed to be left to the banks to decide. Both principal and interest to be paid to the depositors of gold, will be ‘valued’ in gold,” the draft norms said.
It added, as an example, that if a customer deposits 100 gms of gold and gets 1 per cent interest, then, on maturity he has a credit of 101 gms.
With regard to redemption, the guidelines said that customers will have the option of getting it back either in cash or in gold which will have to be exercised at the time of making the deposit. The tenure of the scheme has been proposed at a minimum 1 year and with a roll out option in multiples of one year, it said, adding that it would be like a fixed deposit, breaking of lock-in period will be allowed.
“To incentivise banks, it is proposed that they may be permitted to deposit the mobilised gold as part of their CRR/SLR requirements with RBI. This aspect is still under examination,” it said. Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR) are mandatory requirement which banks have to follow as per RBI directive.
Elaborating other benefits of the scheme, the guidelines said, banks may sell the gold to generate foreign currency. The foreign currency thus generated can then be used for onward lending to exporters or importers.
Bank may convert mobilised gold into coins for onward sale to their customers and can be used for lending to jewellers, it said. The government is also planning to commence work on developing an Indian Gold Coin, which will carry the Ashok Chakra on its face. (PTI)
