India makes changes in its gold monetisation scheme to attract more depositors

India announced modifications to its gold monetisation scheme to attract more depositors in its efforts to boost the plan that has generally received a lukewarm response.

The finance ministry said in a statement it had received several suggestions to make it easier for customers to participate in the scheme that has mobilised just over 900 kg of gold by January 20, 2016.

The changes made in the scheme are:-

1) Premature redemption under Medium and Long Term Government Deposits. Any Medium-Term Deposit will be allowed to be withdrawn after 3 years and any Long-Term Deposit after 5 years. These will be subject to a reduction in the interest payable.

2). Fees to be paid to Banks for their services i.e. gold purity testing charges, refining, storage and transportation charges etc. on Medium- and Long-Term Gold Deposits. Effectively, the banks would be getting a 2.5 % commission for the scheme which will include the charges payable to the Collection and Purity Testing Centres/Refiners.

3). Gold depositors can also give their gold directly to the refiner rather than only through the Collection and Purity Testing Centres (CPTCs). This will encourage the bulk depositors including institutions to participate in the scheme.

4) Bureau of Indian Standards (BIS) has modified the licensing condition for refiners already having National Accreditation Board for Testing and Calibration Laboratories (NABL) accreditation from the existing three years refining experience to one year refining experience. This is likely to increase the number of licensed refiners.

5) BIS has published an Expression of Interest (EOI) on its website inviting applications from the more than 13,000 licensed jewellers to act as a CPTC in the scheme, provided they have tie-up with BIS’s licensed refiners.

6). The quantity of gold collected under the scheme will be expressed up to three decimals of a gram. This will give the consumer better value for the gold deposited.

7). Gold to be deposited with the CPTCs/Refineries can be of any purity. The CPTC/Refiner will test the gold and determine its purity which will be basis on which the deposit certificate will be issued.

8). Banks are free to hedge their positions in the case of short-term deposits.

9). Issues like the method of interest calculation and mechanism for taking loans against GMS deposits have also been clarified.

 

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