Metal withdrawal eased in gold monetisation plan

In a major relaxation in the gold monetisation scheme, the Reserve Bank of India (RBI) allowed redeeming gold under the scheme when the deposit is for the medium or long term. So far, the provision of redeeming gold deposits under the scheme in the form of the metal or returning it on maturity was allowed only for short-term deposits of one-three years.

Indian temples are estimated to be sitting on around 3,000 to 4,000 tonnes of gold and if a part of that is deposited under the scheme, then the gold can be utilised productively and the import bill also comes down. Including unofficial shipments, India imports over 1,000 tonnes of gold every year.

"This was the most required move to attract good volume of deposits. Banks may find it easier to market this product," said Sudheesh Nambiath, lead precious metal analyst for Asia with GFMS Thomson Reuters. According to him, the next important step is the need to "define an Indian standard for gold that will make the metal easily tradeable."

Mumbai-based Siddhivinayak Temple and Tirupati Devasthanam have already expressed their intention to deposit gold under the scheme.

Siddhivinayak Temple is estimated to have 160-kilogramme gold while the Tirupati temple is estimated to have 250 to 300 tonnes of gold.

When a depositor asks for gold on maturity, "an administrative charge of 0.2 per cent of the notional redemption amount in terms of rupee shall be collected from the depositor," said the RBI.

Most experts and stakeholders have favoured returning gold on maturity under the sheme in all maturity deposits.

Gold mobilised under medium- and long-term deposits will be auctioned by MMTC and banks can use it to lend to jewellers that otherwise would have imported it. Thus, idle gold can be brought in the system and rotated among jewellers.

LONG-TERM RELAXATION

• The Reserve Bank of India allowed redeeming gold under the scheme when the deposit is for the medium or long term
   
• So far, redeeming gold deposits under the scheme in the form of gold was allowed only for short-term deposits
  

 

Bridge on river Cauvery on NH 47, Tamil Nadu
 

Bridge on river Krishna in Bagalkote district, Karnataka
 

Rail overbridge on NH5 in Srikakulam, Andhra Pradesh