RBI unveils gold deposit norms

Gold under the scheme will be accepted in scrap form only and banks will first subject the tendered gold to preliminary assay by a non-destructive method, RBI said, pointing out that the depositor will have the option to withdraw the tender depending on the results of the preliminary assay.

The deposit will be repaid in the form of standard goldbar of 0.995 fineness or in rupees equivalent to the price of the gold as on the date of maturity at the option of the depositor. Thescheme was proposed in order to mobilise a portion of the privately held stock of gold in the country and putting it to productive use.

For the purpose of operation of the scheme, facilities like exemption from customs duty for export/import of gold scrap/refined gold, payment of foreign exchange for refining and such other charges, exemption from cash reserve ratio on the liabilities under the scheme and to hedge the price risk arising out of gold price movement through forward contracts, or access international exchanges, has been given.

Banks will be exempted from maintaining the cash reserve ratio CRR on liabilities under the scheme, but will have to maintain a minimum CRR of three per cent on total net demand and time liabilities including zero CRR liabilities. RBI said the authorised banks will also have to maintain statutory liquidity ratio SLR of 25 per cent on liabilities under the scheme.

RBI said the operation of the scheme will be open-ended and it will be available on tap untilfurther notice. For assaying, RBI said, banks may enter into arrangements with existing units, or use the assaying infrastructure being jointly set up by designated banks including State Bank of India.

Gold mobilised under the scheme can be deployed as gold loans to domestic jewellery industry and jewellery exporters, outright sale domestically and sale to other nominated banks, the central bank said. Premature payment/encashment in cash equivalent to the price of gold as on the date of encashment or in gold would be allowed after the lock-in period, RBI said, adding banks may decide the penalty/swap cost to be levied on such withdrawals depending on the period for which the deposit has run.

RBI said rupee loans would be available against collateral of gold deposits and nomination facility will also be allowed on the lines of the other usual rupee deposit schemes. Banks undertaking operation of the scheme would be required to put in place suitable risk management mechanisms to hedge the price risk arisingout of gold price movements.

Banks are permitted to enter into forward contracts in India for buying and selling of gold with only those banks which are authorised by RBI to import gold. Banks have also been allowed to access the international exchanges, London Bullion Market Association or make use of over-the-counter contracts to hedge exposures to bullion prices subject to the exchange control regulations.