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Problems of gold deposit schemes

Banks, ETFs, and jewellers can get into some arrangement, but regulation can hobble the process

Ajay Shah

In the jewellery trade, there is a mechanism by which firms obtain credit from customers. The stress in the economy and the rise in gold prices have come together to create difficulties for many jewellers. Informal arrangements that work in normal times, between people who know one another, do not scale up well into larger numbers of people and difficult times. Ready opportunities for improving the working of this market exist.   One of the less noticed business models of the country is the “gold deposit scheme”. Here, an individual regularly pays money to the jeweller, and ...