Govt tweaks gold monetisation scheme to woo temples, now allows repayments in gold
India imports about 1,000 tonnes of gold every year and the precious metal is the second highest component of the imports bill after crude oil
New Delhi - India on Friday tweaked its gold monetisation scheme to allow repayments in gold for medium- and long-term deposits, making the plan more attractive for temples that are sitting on thousands of tonnes of the metal.
The Sri Venkateswara Swamy Temple or Tirupati, the world's richest Hindu temple whose participation is crucial to the success of mobilising India's idle gold, had requested repayment of deposits held for more than three years in the yellow metal.
"Now, for the gold deposited under Medium and Long Term Government Deposits (MLTGD), the redemption of principal at maturity shall, at the option of the depositor, be either in Indian Rupee equivalent of the value of deposited gold at the time of redemption or in gold," the finance ministry said in a release on Friday.
The government will charge a fee of 0.2 percent on the value of gold redemptions but the interest will be paid in cash, the country's central bank said in a statement.
Depositors will still have the option of redeeming deposits in cash.
"It is expected that the above modification will make the scheme more attractive for potential depositors," the release said.
The interest accrued on the scheme would be calculated with reference to the value of gold in terms of Indian rupee at the time of deposit and would be paid only in cash.
Prime Minister Narendra Modi last year launched the Gold Monetisation Scheme to mobilise gold stashed with individuals, institutions and rich temples for recycling and to reduce imports.
The scheme has garnered about three tonnes of gold in four months out of a national hoard of over 20,000 tonnes.
Earlier also, a number of modifications have been made to the scheme to facilitate monetisation of gold by people.
Medium Term Government Deposit (MTGD) can be made for 5-7 years and Long Term Government Deposit (LTGD) for 12-15 years. For Short Term Bank Deposit (STBD) the redemption in gold was already permitted.
Under the scheme, banks are authorised to collect gold for up to 15 years to auction them off or lend to jewellers from time to time.
Depositors will earn up to 2.50 per cent interest per annum, a rate lower than bank deposits.
India imports about 1,000 tonnes of gold every year and the precious metal is the second highest component of the imports bill after crude oil.
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As per the RBI guidelines, there will be provision for premature withdrawal subject to a minimum lock-in period and penalty to be determined by individual banks