Govt should revisit gold monetisation scheme: Parliamentary panel chief

Expressing reservations over the Centre's proposed gold monetisation scheme, chief of Parliamentary panel on finance Veerappa Moily today said the government should revisit it as it is unlikely to take off with the existing conditions.

The committee would examine the scheme as the gold industry players have submitted a memorandum before the panel raising certain doubts about it.

After hearing the industry's views, a detail report would be placed before Parliament on the need to have a sound and proper policy on gold in the country, he added.

To reduce the current account deficit and bring down the country's dependency on gold imports, the government in May had come out with a draft monetisation scheme that aims to monetise gold through recycling of domestic gold stock.

"This scheme has to be reexamined and revisited. This is not my reservation alone but many other people in the industry have (also) expressed that it may not take off. There is no point coming out with a scheme which will not take off," Moily, the Parliamentary Standing Committee on Finance Chairperson, told reporters at an Assocham event.

The industry players have submitted a memorandum to the committee on this issue. The panel will examine it and will come out with a standalone report on gold monetisation scheme, he added.

Earlier while addressing the event, Moily said that the government should take steps to make the scheme "simple and easy to comprehend for the public at large".

Citing reasons which could hinder kick start of the scheme, he said: "If a low rate of interest rate like 1 or 2 per cent is offered for gold deposits, few people will come forward."

He further said that there is an emotional value attached to family-inherited piece of the metal, households do not want to lose identify of its inheritance by melting it.

Also, the integrity and number of centres where gold jewellery of individuals will be melted and certified will have to be raised exponentially so as to cover the length and breadth of the country, he said.

More importantly, the number of conditions laid out to open a gold deposit account may act as deterrent, he noted.

Asking industry players to make presentation on these issues before the panel, Moily said: "May be, we crystalise your ideas and a submit a report to Parliament to evolve a sound and proper policy on gold."

Under the proposed scheme, banks are allowed to accept deposits of as low as 30 grams of gold in any form. The banks will be free to fix the interest rates on such deposits and the tenure of the deposit will be minimum one year and with a roll out in multiples of one year.

Such income from gold deposits in banks is proposed to be made free from income tax or capital gains tax.