The gold available with the
country should be put to productive use, and the new schemes show us the way to
achieve the goal: Narendra Modi
Prime Minister Narendra Modi on Thursday launched three
gold-related schemes, namely the Gold Monetisation Scheme, Sovereign
Gold Bond Scheme and the Gold Coin and Bullion Scheme.
“India has no reason to be described as a poor country, as it
has 20,000 tonnes of gold. The gold available with the country should be put to
productive use, and these schemes show us the way to achieve this goal,” the
Prime Minister said while launching the schemes.
Gold has often been a source of women's empowerment in Indian
society, and these schemes will underscore that sense of empowerment, Mr Modi
added.
The Gold Monetisation Scheme (GMS) will replace the existing
Gold Deposit Scheme, 1999. However, the government has made clear that deposits
outstanding under the Gold Deposit Scheme will be allowed to run till maturity
unless the depositors prematurely withdraw them.
Under the GMS, resident Indians (classified as individuals,
Hindu Undivided Families, Trusts including Sebi-registered Mutual Funds and
Exchange Traded Funds) can deposit gold at collection and purity testing
centres certified by the Bureau of Indian Standards.
The deposit certificates will be issued by banks in equivalence
of 995 fineness of gold and the principal and interest of the deposit under the
scheme will be denominated in gold. The terms of deposit range from short-term
deposits (1-3 years), medium-term deposits (5-7 years) and long-term deposits
(12-15 years).
Depositors will be allowed to prematurely withdraw their
deposits subject to a minimum lock-in period and a penalty that is to be
determined by each authorised bank. “The minimum deposit at any one time shall
be raw gold (bars, coins, jewellery excluding stones and other metals)
equivalent to 30 grams of gold of 995 fineness. There is no maximum limit for
deposit under the scheme,” the government said in a notification.
“The designated banks may sell or lend the gold… for minting
India Gold Coins and to jewellers, or sell it to other designated banks
participating in GMS,” the notification added.
However, attracting interest in the scheme will not be easy,
according to Mr CP Krishnan, Director, Geofin Comtrade. “In the Gold
monetisation scheme, even though the interest part and tax benefits are the
attracting points, overcoming the sentimental approach of the public towards
their gold belongings is the key factor that determines the success of the
scheme,” Mr Krishnan said.
Under the Sovereign Gold Bond Scheme, the Reserve Bank of India
will issue Gold Bonds on behalf of the Government of India. The applications
for the bonds will be accepted between November 5-20 and the bonds will be
issued on November 26. The Bonds will be sold through banks and designated post
offices as may be notified.
As with the GMS, the Gold Bonds will be sold only to “Indian
entities including individuals, HUFs, trusts, Universities, charitable
institutions”. They will be denominated in multiples of gram(s) of gold with a
basic unit of 1 gram.
The Bonds will be for a tenor of eight years, with an exit
option from the 5th year. Those buying the bonds will not be allowed to
purchase less than two grams-worth of bonds and not more than 500 grams-worth
per person per financial year.
Under the Gold Coin and Bullion Scheme, the government will
issue gold coins, the first ever national gold coins, which will have the Ashok
Chakra engraved on them. Initially, coins of 5 grams and 10 grams will be
available, soon to be followed by a 20 gram bar.
The government will make available 15,000 coins of 5 gm, 20,000
coins of 10 gm and 3,750 gold bars. “The Indian Gold coin is unique in many
aspects and will carry advanced anti-counterfeit features and tamper proof
packaging that will aid easy re-cycling,” the government said.
These schemes are aimed at bringing the gold lying with citizens
into the economy, and at reducing India’s dependence on gold imports.
“These policies are a step in the right direction and would
allow for the channelisation of the unutilised
domestic gold reserves towards supporting the country’s
economic growth. The past few years have witnessed an exponential increase in
gold imports exerting tremendous pressure on our current account. With the
schemes being rolled out we should be able to reduce our gold imports,” said Dr
A Didar Singh, Secretary General, FICCI.
India imported Rs 2.1 lakh crore worth of gold in financial year
2014-15, according to CMIE, not counting jewellery. So far, Rs 1.12 lakh crore
worth of gold has been imported between April-September 2016.
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