MMTC seeks govt's nod to auction off 5 tonnes of gold collected under GMS

8 tonnes of gold already sold, the trading PSU seeks Central government's mandate to auction additional 5 tonnes

After successfully auctioning 8 tonnes of gold in the first phase, India’s state-owned trading behemoth, MMTC has approached the central government seeking the mandate for auctioning an additional 5 tonnes of gold collected under the latter’s Gold Monetisation Scheme (GMS).

“We have almost completed the target of auctioning 8 tonnes of gold collected under GMS and now sought the government’s permission to auction additional 4 to 5 tonnes”, a senior official of the company said.

“The response of the auction conducted at various locations where the gold was stocked was good. Mostly traders and jewellers participated in it. The price fetched at auctions were little higher than the prevailing international price of the yellow metal”, he added.

He said, despite the advent of the festive season, the sentiment for gold import has been subdued over the past few weeks due to the sliding value of the rupee against dollar. 

By March, this year, the government had mobilised about 21 tonnes of gold under the Gold Monetisation Scheme, out of which it intended to sell 12 tonnes through auction.  MMTC was nominated by the finance ministry to conduct the auction and an agreement was signed with the company to this effect.

Under the scheme, gold deposits were accepted from households, temples and trusts with tenures of 1 to 3 years (short-term), 5 to 7 years (medium term) and 12 to 15 years (long-term).

While short-term gold deposits are converted into gold coins by MMTC, the long-term deposits were marked for auction.

Most of the gold mobilised under the scheme had come from temples and trusts. The response of households was poor given the sentimental attachment of families to ancestral jewellery passed on to them through generations.

In his 2015-16 budget speech, finance minister Arun Jaitley had stated that stocks of gold in India were estimated to be over 20,000 tonnes and most of this gold was neither traded, nor monetised.

The objective of the Gold Monetisation Scheme was to put a part of this gold lying idle in storages back in circulation and in the process achieve import substitution to that extent.