PM launches three gold schemes

Prime Minister Narendra Modi on Thursday launched three gold-related schemes aiming to channelise gold worth over Rs 52 lakh crore lying with households into the banking system and to curb import of the yellow metal.

Modi launched the gold monetisation scheme to convert jewellery and other yellow metal assets with people into interest-bearing deposits, and the sovereign bond scheme with an eight-year tenure, while allowing an exit option after five years.

Besides, the prime minister also unveiled the first ever Indian gold coin and bullion, bearing national emblem Ashok Chakra on one side and Mahatma Gandhi's image engraved on the other side.

India imports a staggering 1,000 tonnes of gold every year, draining out foreign exchange and putting pressure on the fiscal deficit. An estimated 20,000 tonnes of gold are lying with households and temples.

Describing the schemes as an example of “sone pe suhaaga” (icing on the cake), the prime minister said people should take advantage of these plans and help in nation building.

Under the Gold Monetisation Scheme, 2015, banks will collect gold for up to 15 years to auction them or lend to jewellers from time to time. Depositors will earn up to 2.5 per cent interest per annum, a rate lower than bank deposits.

With the objective to bring down physical buying of gold, the Sovereign Gold Bonds Scheme was launched that offers 2.75 per cent annual interest rate.

Buyers will have to disclose their permanent account number (PAN) and other know your customer (KYC) documents. Initially, the coins will be available in denominations of 5 and 10 grams.

A 20 gram bullion will also be available through 125 Metals and Minerals Trading Corporation of India (MMTC) outlets.

Speaking on the occasion, Finance Minster Arun Jaitley said it is essential to discourage gold imports and the bond scheme is expected to lower demand for physical gold.

The prime minister described the launch of the Indian Gold Coin as a matter of pride for the nation and said that people will no longer have to depend on foreign-minted gold bullion or coins.

As far as GMS is concerned, earnings are exempt from capital gains tax, wealth tax and income tax.