The government has made a slew of changes in its gold monetisation scheme to make it more flexible and attractive.
Since the scheme was introduced two months ago the >government has collected over 900 kilos of gold . The new norms issued by the Reserve Bank of India (RBI) in consultation with the government are based on suggestions to make the scheme more accessible for potential gold depositors, and allow premature redemptions after three years and five years for medium term and long term deposits, respectively. The interest payable to depositors in such cases would be reduced, while allowing them an exit option.
Further, the quantity of gold collected under the scheme will be expressed up to three decimals of a gram to give consumers better value for their gold deposits that can be of any purity level.
The gold monetisation scheme was launched by Prime Minister Narendra Modi in November 2015 and allows people to deposit gold jewellery or bars with banks or designated collection agents, which could now also include 13,000 jewellers across the country. In return, they get up to 2.50 per cent tax-free interest per annum and an exemption from capital gains made through trading or at the time of redemption.
The gold collected under the scheme is refined for domestic purpose with an eye on cutting India’s high gold imports, which registered a surge of 179 per cent in the month of December 2015.
“A number of suggestions have been received to make the scheme easier for the customers to participate,” the finance ministry said in a statement on Sunday, listing out the changes to the scheme, adding that a media campaign, including print media and mobile SMS is being undertaken to increase awareness among depositors.
Gold depositors can now give their gold directly to the refiner rather than only though collection and purity testing centres (CPTCs), the ministry said, adding that this would encourage bulk depositors including institutions to participate in the scheme.
Banks would now be paid a 2.5 per cent commission for their services on medium and long term deposits which include testing the purity of gold deposits, refining, storage and transportation. Banks have also been given the freedom to hedge their positions in the case of short-term deposits, and issues around interest rate calculation as well as extending loans against gold deposits have been clarified.
The number of refiners under the scheme are also likely to go up with the Bureau of Indian Standards (BIS) modifying the licensing condition that mandated three years’ experience to one year refining experience.