Dear Readers,
Gold Monetization Scheme is one of the scheme that has been in news for quite a while. Our Union Minister of Finance stated in Union Budget 2015-2016 that India has approximately 20,000 tonnes of gold but that gold is neither traded nor monetised. Have you ever thought that a growing economy like India would need such a huge amount of gold and why not? If we are having such a huge reserve then why not make it flow in the veins of our economy. Yes friends, this scheme is all about that. Now let us discuss in detail:
The very first question that arises in our mind is that what is this Gold Monetization Scheme and what are its objectives?
Well, the answer lies in the name itself. Gold Monetization itself talk about converting the gold into money if we talk as a layman. It is a scheme that facilitates the depositors of gold to earn interest on their metal accounts. Once the gold is deposited in metal account, it will start earning interest on the same. The objectives of the Gold Monetization scheme are:
(i) To mobilize the gold held by households and institutions in the country.
(ii) To provide a fillip to the gems and jewellery sector in the country by making gold available as raw material on loan from the banks.
(iii) To be able to reduce reliance on import of gold over time to meet the domestic demand.
Opening of Gold Savings Account with the banks
When the customer produces the certificate of gold deposited at the Purity Testing Centre, the bank will in turn open a ‘Gold Savings Account’ for the customer and credit the ‘quantity’ of gold into the customer’s account. Simultaneously, the Purity Verification Centre will also inform the bank about the deposit made.
Interest payment by banks:
The bank will commit to paying an interest to the customer which 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. For example if a customer deposits 100 gms of gold and gets 1 per cent
interest, then, on maturity he has a credit of 101 gms.
Redemption:
The customer will have the option of redemption either in cash or in gold, which will have to be exercised in the beginning itself (that is, at the time of making the deposit).
Tenure:
The tenure of the deposit will be minimum 1 year and with a roll out in multiples of one year. Like a fixed deposit, breaking of lock-in period will be allowed.
Tax Exemption:
In the Gold Deposit Scheme (1999), the customers received exemption from Capital Gains Tax, Wealth tax and Income Tax. Similar tax exemptions are likely to be made available to the customers in the GMS after due examination.
Utilization of Deposited Gold
Under medium and long-term deposit
- Auctioning
- Replenishment of RBIs Gold Reserves
- Coins
- Lending to jewelers
Under short-term deposit
- Coins
- Lending to jewelers
Tax Exemption:
Tax exemptions, same as those available under GDS would be made available to customers, in the revamped GDS, as applicable.
Gold Reserve Fund:
The difference between the current borrowing cost for the Government and the interest rate paid by the Government under the medium/long term deposit will be credited to the Gold Reserve Fund.
Revamped Gold Metal Loan Scheme
Gold Metal Loan Account: A Gold Metal Loan Account, denominated in grams of gold, will be opened by the bank for jewelers. The gold mobilized through the revamped GDS, under the short-term option, will be provided to jewelers on loan, on the basis of the terms and conditions set-out by banks, under the guidance of RBI.
Delivery of gold to jewelers:
When a gold loan is sanctioned, the jewelers will receive physical delivery of gold from refiners. The banks will, in turn, make the requisite entry in the jewelers’ Gold Loan Account. Interest received by banks: The interest rate charged on the GML will be decided by banks, with guidance from the RBI.
Tax exemptions, same as those available under GDS would be made available to customers, in the revamped GDS, as applicable.
Gold Reserve Fund:
The difference between the current borrowing cost for the Government and the interest rate paid by the Government under the medium/long term deposit will be credited to the Gold Reserve Fund.
Revamped Gold Metal Loan Scheme
Gold Metal Loan Account: A Gold Metal Loan Account, denominated in grams of gold, will be opened by the bank for jewelers. The gold mobilized through the revamped GDS, under the short-term option, will be provided to jewelers on loan, on the basis of the terms and conditions set-out by banks, under the guidance of RBI.
Delivery of gold to jewelers:
When a gold loan is sanctioned, the jewelers will receive physical delivery of gold from refiners. The banks will, in turn, make the requisite entry in the jewelers’ Gold Loan Account. Interest received by banks: The interest rate charged on the GML will be decided by banks, with guidance from the RBI.
MoU between Banks, Refiners and Purity Testing Centres
1. The banks will enter into a tripartite MoU with refiners and purity testing centres, that are selected by them to be their partners in the scheme.
2. The MoU will clearly lay down the details regarding payment of fee, services to be provided, standards of service and the details of the arrangements between the banks, refiners and purity testing centres.
2. The MoU will clearly lay down the details regarding payment of fee, services to be provided, standards of service and the details of the arrangements between the banks, refiners and purity testing centres.
-Source, mygov.in
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