The Reserve Bank of India (RBI) on Thursday issued directions to all scheduled commercial banks on the implementation of the Gold Monetisation Scheme which will replace the Gold Deposit Scheme of 1999.
According to the guidelines banks will be allowed to fix their own interest rates on gold deposits.
The deposits outstanding under the Gold Deposit Scheme will be allowed to run till maturity unless the depositors prematurely withdraw them, according to a press release issued by the RBI. The central bank said that resident Indians that include individuals, HUFs (Hindu Undivided Families), trusts including mutual funds/exchange traded funds registered under Sebi (mutual fund) regulations and companies can make deposits under the scheme.
The minimum deposit at any one time shall be raw gold — bars, coins, jewellery excluding stones and other metals — equivalent to 30 grams of gold of 995 fineness.
“There is no maximum limit for deposit under the scheme. The gold will be accepted at the Collection and Purity Testing Centres (CPTC) certified by Bureau of Indian Standards (BIS) and notified by the Central government under the scheme. The deposit certificates will be issued by banks in equivalence of 995 fineness of gold,” it said.
The RBI notification in this regard comes ahead of the formal launch of the scheme by Prime Minister Narendra Modi on November 5. The gold deposit scheme is aimed at mobilising a part of an estimated 20,000 tonnes of idle precious metal with households and institutions.
As per the guidelines, banks will be free to set interest rate on such deposit, and principal and interest of the deposit will be denominated in gold. “Redemption of principal and interest at maturity will, at the option of the depositor be either in Indian rupee equivalent of the deposited gold and accrued interest based on the price of gold prevailing at the time of redemption, or in gold. The option in this regard shall be made in writing by the depositor at the time of making the deposit and shall be irrevocable,” it said.
The interest will be credited in the deposit accounts on the respective due dates and will be withdrawable periodically or at maturity as per the terms of the deposit, it said. “The designated banks will accept gold deposits under the Short Term (1-3 years) Bank Deposit (STBD) as well as Medium (5-7 years) and Long (12-15 years) Term Government Deposit Schemes. While the former will be accepted by banks on their own account, the latter will be on behalf of Government of India,” it said.
The short term bank deposits will attract applicable cash reserve ratio (CRR) and statutory liquidity ratio (SLR), it said. With FE