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Gold Monetisation Scheme
Gold Monetisation Scheme. In the Union Budget Speech of 2015-16, an announcement was made and it was proposed to introduce a Gold Monetization Scheme, which will replace both the present Gold Deposit and Gold Metal Loan Schemes.
In the Union Budget Speech of 2015-16, an announcement was made and it was proposed to introduce a Gold Monetization Scheme, which will replace both the present Gold Deposit and Gold Metal Loan Schemes. The new scheme will allow the depositors of gold to earn interest in their metal accounts and the jewelers to obtain loans in their metal account. Banks/other dealers would also be able to monetize this gold.
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Loan against gold for various agricultural purposes is a loan product where owner of the gold can avail loan against it. On the other hand, in Gold Monetization Scheme the owner will earn income on the deposited gold. As these are to diverse products, there seems no material impact on the existing loan against gold product of banks due to introduction of the Gold Monetization Scheme. The government’s gold monetisation scheme that will allow individuals to park a minimum of 30 grams of the yellow metal with banks and earn tax-free interests will help curb rising gold imports.
The Ministry of Finance has fixed melting charges at Rs 500 per lot of upto 100 grams and Rs 100 per lot of additional 100 grams which jewellers feel is too high. part from melting charges, the customers will have to bear the cost of testing / fire assaying charges of Rs 300, stone removal charges at actual of Rs 100 and melting loss. Higher gold imports—$56.5 and $53.8 billion in FY12 and FY13, respectively—resulted in record current account deficit of 4.2% and 4.8% of GDP in these two years. The scheme is intended to bring into circulation a part of the 20,000 tonnes of gold held by households and temple trusts.
It will increase recycling of domestically held gold and reduce jewellers’ reliance on imported gold. Even if the scheme is able to mop up 200 tonnes of deposits every year, it could help reduce India’s gold import bill by R60,000 crore or over $9 billion in a year For banks, the attractiveness of the new scheme will depend on whether the deposit will count towards cash reserve ratio and statutory liquidity ration requirements. If they are allowed to do so, it could enable banks to release funds for lending in the economy.
