Govt plans to launch gold monetisation scheme this Diwali

Move to reduce dependence on imports, fillip to jewellers

The government is planning to launch the much-awaited gold monetisation scheme during Diwali in November. According to finance ministry sources, a cabinet note has already been sent to this effect.

The scheme aims at reducing dependence on import of gold to meet the domestic demand and provide a fillip to the gems and jewellery sector in the country by making gold available as raw material on loan from the banks.

The finance ministry expects the scheme to get cleared by the cabinet in a week or two. After the cabinet gives a nod, the Reserve Bank of India (RBI) will prepare guidelines for the gold monetisation scheme.

The scheme will then be launched for depositors, who will earn interest on their gold account. It will initially be introduced only in selected cities.

The scheme was announced in the Budget this year by Finance Minister Arun Jaitley. Under the proposed scheme, a person or entity would be allowed to deposit a minimum quantity of 30 grams of gold in any form, bullion or jewellery, for one year in a gold saving account. The banks will decide the interest rate.

To make the scheme attractive to households, the interest earned on it will likely be exempt from income tax, wealth tax and capital gains tax.

Before depositing gold into a metal account, customers will have to get its purity checked from the testing and collection centres certified by the Bureau of Indian Standards (BIS). They will be given a certificate by the collection centre certifying the amount and purity of the deposited gold.

When the customer produces the certificate of gold deposited at the Purity Testing Centre, the bank will open a ‘Gold Savings Account’ for the customer.

Under the scheme, both principal and interest to be paid to the depositors of gold, will be ‘valued’ in gold. For example, if a customer deposits 100 gram of gold and gets one percent interest, then, on maturity he has a credit of 101 gram.

Customers will have the choice to take cash or gold on redemption, but the preference has to be stated at the time of deposit.

The proposed scheme also seeks to benefit jewellers who can obtain loans in their metal account. Banks and other dealers would also be able to benefit from this scheme.