Modi's gold deposit scheme attracts only 400 grams so far

Govt was expecting to hoard an estimated 20,000 tonnes

A gold deposit scheme launched amid fanfare by Indian Prime Minister Narendra Modi two weeks ago has so far attracted only 400 grams, an industry official said on Thursday, out of a national hoard estimated at 20,000 tonnes.

Modi has urged Indians to put gold stashed in homes and temples in the bank, offering modest rates of interest that earlier schemes have lacked. His government has also launched 'paper' gold in the form of gold-backed bonds.

A shortage of centres to assay the gold being put on deposit is a problem that the government has agreed to address, said Anil Sankhwal, the northern regional chairman of India's Gem and Jewellery Export Promotion Council.

"Only 400 grammes have been deposited so far," Sankhwal told reporters after meeting financial ministry officials. "The government has agreed to review the scheme and open more centres for gold testing and depositing in banks."

Indians have a deep attachment to gold, which they value not just as a wedding gift but also as a way to keep wealth away from the prying eyes of tax collectors.

That, say experts, will make it a challenge to wean them off the yellow metal and put the vast store of wealth to work in India's undersized financial system, funding investments that Modi hopes would promote economic growth and create jobs.

A finance ministry official said the government had agreed to increase the number of testing centres and refineries involved in the scheme. There are 29 testing centres and four refineries currently accredited to it.

The number of testing centres would increase to 55, and refineries to 20, by the end of the year.

Another scheme, to mint India's own series of gold coins, is going a bit better than the deposit scheme.

Buyers have acquired 6,200 of the Ashoka Chakra coins - which carry the symbol of a 24-spoke circle that also graces the Indian national flag and has its origins in Buddhism.