Individuals will now be able to earn interest in gold on deposits of a minimum 30 grams of the precious metal, according to the draft guidelines for the proposed gold monetisation scheme issued by the finance ministry on Tuesday.
Additionally, the government will also provide tax exemption to customers of the scheme on the lines of the Gold Deposit Scheme (1999) that provided exemption from capital gains tax, wealth tax and income tax.
“The objectives of the gold monetisation scheme are to mobilise the gold held by households and institutions in the country, provide a fillip to the gems and jewellerysector in the country and reduce the reliance on import of gold over time to meet the domestic demand,” said the finance ministry, seeking public comments by June 2.
Under the scheme, a person or institution holding surplus gold can get it valued from a BIS-approved hallmarking centres, open a Gold Savings Account in banks for a minimum period of one year and earn interest in either cash or gold units, the draft said, adding that the gold to be deposited can be either in the form of jewellery or bullion.
The interest rate on such deposits would be fixed by the banks.
In turn, banks would be permitted to deposit the gold as part of their CRR and SLR requirements, sell it to buy foreign currency, convert it into gold coins, trade it on domestic commodity exchanges or even lend it to jewellers. The gold monetisation scheme was announced by finance minister Arun Jaitley in the Union Budget 2015-16 as a means to reduce reliance on imports of the metal and control the current account deficit.
“The new scheme will allow the depositors of gold to earn interest in their metal accounts and the jewellers to obtain loans in their metal account. Banks/other dealers would also be able to monetise this gold,” he had announced.
However, with the vast infrastructure required for the scheme including banks, refineries and hallmarking centres, it will be started initially in a few cities only, the finance ministry said.