Gold monetisation norms relaxed as only 400 gm gold deposited

Move prompted by tepid response to gold monetisation scheme in the fortnight since its launch

In the fortnight since the gold monetisation scheme was launched, only 400 gm gold has been deposited and with only one bank, as no other bank had tripartite agreements with hallmarking centres and gold refiners. Now, the finance ministry and the Bureau of Indian Standards (BIS) are simplifying the administration of the scheme to get it moving.

In contrast, the response to gold bonds and coins has been much better. A government source said retail investors had applied for Rs 100 crore worth of bonds and 6,000 gold coins had been sold.

The gold monetisation scheme, bonds and coins were launched on November 5 by Prime Minister Narendra Modi, to reduce bullion imports and mobilise 22,000 tonnes of idle gold in the country.

In a meeting with gold refiners and hallmarking centres on Thursday, finance ministry and BIS officials allowed refiners with only one year’s track record to sign up for the scheme. There were 18 gold refiners in the country in 2014 and their numbers have climbed to 32 now. The BIS has certified five refiners so far, but by December, once the norms are relaxed, 20 refiners are expected to be certified.

There are 35 certified hallmarking centres and it was decided in the meeting that 100 would be approved by the end of December. Any business entity that satisfies BIS criteria can act as a hallmarking centre for the gold monetisation scheme.

It was also decided that 11 banks would sign agreements with all certified 35 hallmarking centres. To motivate banks to do this, the finance ministry clarified that the gold deposits would be made transferable. Banks will be allowed to lend against gold deposits. The ministry also clarified that banks could ask customers about the ownership of the gold being deposited.

Banks have also been allowed to deal directly with refiners because of problems associated with routing bulk gold deposits. The finance ministry said refiners could open hallmarking centres in their premises. Refiners can also open testing centres in cities where temples propose to deposit their bulk gold.

Sources said the government would also address tax concerns surrounding the gold monetisation scheme. The meeting was attended by Shaktikanta Das, economic affairs secretary.

The Reserve Bank of India has set the price of gold at Rs 2,684 per gm for the bonds till the issue closes on November 20, whereas the ruling market price of bullion is five to six per cent lower depending on the city. The Rs 100-crore subscription for the bonds is, therefore, seen as a good response. A banker said three to four tranches of bonds could be expected in the next four months.