This scheme will help in the business growth of banks as the held up gold can be mobilised.
The Narendra Modi government held a cabinet meeting on Wednesday led by Union Finance Minister Arun Jaitley.
In this cabinet meeting, the government cleared a series of proposals which includes GST bill, gold monetisation scheme, hike in dearness allowance and putting forward some spectrum guidelines.
Cabinet cleared the gold monetisation scheme which would mean the following:
(i) The nod to gold monetisation scheme is going to reduce the demand of gold in its physical form and the idle gold will fish out of households and other entities.
(ii) Now, individuals can buy gold bonds of upto 500 grams in a year and such bonds are to be issued for a period of 5-7 years.
(iii) Under this scheme instead of buying physical gold, residents of India can buy the gold bonds.
(iv) Gold Bonds will be issued in 2, 5 and 10 grams and it will protect investors from medium term volatility in gold prices.
(v) People holding idle gold can deposit it in banks for either short term, medium or long term.
(vi) Normal taxation laws will be applicable on this scheme.
(vii) This scheme will benefit common man because people can deposit their idle gold in agencies and take advantage when the gold price rises and earn interest on the deposit.
Also Read: Gold monetisation scheme: Should you invest in it?
Earlier, Arun Jaitley had stated that over 20,000 tonnes of gold in India is neither traded nor monetised.
The proposed 'Gold Monetisation Scheme' will monetise idle gold worth Rs 60 lakh crore held by households and institutions, according to Jaitley.
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 help in the business growth of banks as the held up gold can be mobilised.
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