New Delhi: The government Wednesday came out with details of the twin gold schemes aimed at reducing the demand for physical gold and said that interest rate on the schemes would be decided in consultation with the RBI.


COMMERCIAL BREAK
SCROLL TO CONTINUE READING

The twin schemes -- Gold Monetisation Scheme (GMS) and Gold Bond Scheme (GBS)-- was approved by the Cabinet last week. The schemes would come into effect after notification by the Finance Ministry.


The GMS provides an option to people to monetise physical gold by depositing them with authorised banks and earning interests from such deposits.


In an office memorandum, the Finance Ministry said there are a total 331 of BIS recognised Assaying and Hallmarking Centres wherein the purity of physical gold would be verified.


It also gave the details of melting charges of gold wherein the minimum charge for up to 100 gm is Rs 500 per lot, which can go up to Rs 1,3400 for that of 900 gm to 1,000 gm.


The interest rate on these two schemes would be decided by the Government upon consultation with the RBI, said the office memorandum.


Through the GMS, gold in any form can be deposited with banks for a period of one to 15 years that will earn interest while redemption will be at the prevailing value at the end of the tenure.


Banks will be allowed to sell the gold, deposited with them, to jewellers to boost domestic supply and cut reliance on imports under the GMS.


The gold monetisation scheme provides for incentives to the banks, while individuals and institutions can deposit as low as 30 gm of gold, while enjoy the same tax treatment as was accorded to Gold Deposit Scheme of 1999.


Sovereign gold bonds, on the other hand, are aimed at people buying the precious metal as an investment. Such bonds will be issued in denominations of 2, 5, 10, 50 and 100 gram for a term of 5-7 years with a rate of interest to be calculated on the value of the metal at the time of investment.


However, there will be a cap of 500 gram that a person can purchase in a year. Such bonds will be offered to only Indian citizens and institution while the securities will be traded on exchanges to allow early exit for investors.