This scheme will provide for incentives to the banks. One can deposit as low as 30 gm gold and earn interest, also in gold.
Union Finance Minister, Arun Jaitley in the Budget 2015-16 announcement, stated that over 20,000 tonnes of gold in India is neither traded nor monetised.
Sooner or later, the government has finally proposed a 'Gold Monetisation Scheme' which will monetise idle gold worth Rs 60 lakh crore held by households and institutions.
This scheme highlights that the gold depositors will be allowed to earn interest in their metal accounts and the jewellers will be allowed to obtain loans in their metal account. Even the banks and dealers can monetise the gold.
This scheme will provide for incentives to the banks. One can deposit as low as 30 gm gold and earn interest, also in gold.
This scheme will help in the business growth of banks as the held up gold can be mobilised.
One thing that still needs clarification is whether the gold depositors will be questioned by the tax department on their gold holdings.
India being one of the largest consumers of gold in the world need to know what this scheme actually is.
Why should you open a Gold Savings Account with a bank:
1. The bank will open a 'Gold Savings Account' when a customer produces a certificate of gold deposited at the Purity Testing Centre. The quantity of gold will be credited into the customer's account.
2. Banks will pay you interest- Immediately after 30 or 60 days of opening the Gold Savings Account, the bank will decide the interest rate to be given to the depositors of gold (That's the catch). The principle and interest will be given to the depositor which will be valued in gold.
3. The customer can redeem either in cash or in gold (That his choice). But it has to be exercised in the beginning itself.
4. Ways to deposit the gold will be similar to your fixed deposit accounts. In this case the tenure will be minimum one year, with breaking of lock-in period facility.
5. Customers will receive similar tax exemptions in this scheme as they received in the 1999 Gold Deposit Scheme. You will be allowed to receive exemption from Capital Gains Tax, Wealth Tax and Income Tax.
What the banks will do:
1. Banks will be allowed to deposit the mobilised gold as part of their Cash Reserve Ratio with the Reserve Bank of India. Cash Reserve Ratio is the amount of funds that commercial banks need to keep with the RBI.
2. Banks can also sell the gold to generate foreign currency. The currency further can be used for lending to exporters and importers.
3. They can convert the gold into coins which can be further sold to their customers.
These features can help to incentivize the banks and use the gold wisely for future.
What jewellers need to know:
1. Jewellers can also open a Gold Loan Account with the bank.
2. The jewellers will receive physical delivery of gold from the refiners once their gold loan is sanctioned.
Factors on which banks will charge interest rate to the jewellers:
1. Interest rate paid to the gold depositors.
2. Fee paid to the refiners and Purity Verification Centres.
3. Profit margin of the banks.
One important factor that has to be kept in mind is that banks can get loan from International markets as well and lend it to the jewellers but this route will entirely ruin the process. Hence, while deciding the interest rate this point has to be kept in mind.
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