Several major jewellers in the city have informed customers who deposited money in long-term gold instalment schemes to foreclose them.
They have also advised customers to buy gold in advance before the maturity period of the scheme lapses. This is to ensure adherence to a new rule that places such schemes under the umbrella of public deposits, thereby limiting their period to a year.
While it means less savings and decrease in bonus amounts for customers, jewellers have to deal with reduced cash flow.
According to jewellers, the new Companies (Acceptance of Deposit) Rules, 2014, limits the interest rate that companies can offer to 12.5 per cent, and caps the total deposits collected at 25 per cent of their net worth. The rule, which includes gold instalment schemes and limits the scheme period to 12 months, was implemented in July.
Earlier, the jewellers offered savings schemes under which customers could purchase gold ornaments by paying instalments for a period of between 15 months and five years. Now, they are restricted from collecting instalments beyond one year; thus the move asking old customers to buy up before the scheduled term expires.
Lovely Mohan, a resident of Mogappair, said though it has meant less savings, she continues to deposit in jewellery schemes. “I cannot afford to buy gold in a single purchase. I get small benefits, like one instalment as bonus and concession in wastage and making charges, with the schemes.”
For jewellers, it continues to be a popular method of promotion. L.K.S. Syed Ahmed, chief advisor, Tamil Nadu Jewellers Federation, said: “We inform customers who wish to deposit to be prepared for making advance purchases. We do not gain great profit from such schemes, but it is a means to retain customers.”
However, small and medium jewellers continue to offer 15-month schemes. S. Santhakumar, honorary secretary, Madras Jewellers and Diamond Merchants Association, said only large showrooms that have registered as private limited companies are bound by the restriction.
