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The biggest bullion importing bank in India, Bank of Nova Scotia, plans to team up with jewellers for the first time to offer a gold deposit scheme, hoping ease of access and attractive interest rates will tempt people to part with their jewellery and relieve tight supplies.
The bank is in talks with the Gems and Jewellery Trade Federation (GJF) and the Reserve Bank of India (RBI) to finalise details, the head of the bank's Indian bullion operations said.
Gold imports to the world's biggest bullion buyer have all but dried after steps taken by the government and RBI to cut these to help rein in a record current account deficit, leaving domestic jewellers scrambling for supplies.
With demand still strong and expected to rise in the next few months as the festival season starts, the gold industry has turned its sights on the 20,000 tonnes of gold thought to be squirrelled away in homes.
"It's in a fairly advanced stage. There are a couple of issues to be sorted out, so once (they are) sorted out, it could be launched," said Rajan Venkatesh, managing director of Scotiabank's Indian bullion operations. He declined to spell out the problems or the details of the scheme.
GJF's chairman, Haresh Soni, said the deposit scheme was currently under discussion with RBI, and the trade group hopes to get approval from the central bank in four or five weeks.
RBI declined to comment.
Soni said he had proposed interest rates for the scheme of 2.5 to three per cent of the gold price, to be paid in gold. Similar schemes run by banks on their own offer lower rates and have not been popular.
Indians prefer to hold their gold in ornament form and need strong incentives to give up heirlooms and wedding gifts.
