Shirdi temple pledges 200 kg gold to monetization scheme
The Sai Baba temple in Shirdi has decided to pledge 200 kg of gold to the PM's gold monetization scheme. A verdict by the Bombay HC in 2012 prohibits the temple from melting gold offered by devotees. The temple trust is now looking for ways to get the court ban lifted, in order to make use of the Centre's gold monetization scheme.
The depositors of gold would earn interest on their accounts. The minimum quantity of deposits is pegged at 30 gram to encourage even small deposits. Both principal and interest to be paid to the depositors of gold at maturity of the scheme, will be 'valued' in gold. Customer can choose take cash or gold at redemption, though he's supposed to specify it when depositing.
The government said that the gold monetization scheme would decrease India's dependence on the import of gold which can be put to productive use. An assessment claimed that India spent "$34.32 billion to import about 930 tonnes of gold" in 2015. India has gold stocks of 20,000 tonnes which aren't "traded, nor monetized"; the gold monetization scheme would make this gold available to jewelers.
RBI will also offer Gold Bonds to lower India's gold imports wherein "RBI will issue bonds in the denomination of 2 gms, 5 gms and 10 gms of gold."
The Cabinet had approved the gold monetisation scheme in order to to reduce the metal's demand in physical form. The scheme was announced in the 2015-16 budget by Finance Minister Arun Jaitley. The interest earned on the scheme would be exempt from income tax as well as capital gains tax. Jaitley said people would be able to take advantage of the escalating gold prices.
Metals and Minerals Trading Corporation (MMTC) announced that it will launch India Gold Coins across the country in October. This launch would be a part of the Centre's gold monetization scheme that would enable investors of gold to "earn interest on their metal accounts." Initially, MMTC would make 20,000 coins every month, which could rise to 50,000 depending on their market.
Prime Minister Narendra Modi would launch the gold monetisation scheme on November 5. The scheme is aimed at tapping part of an estimated 20,000 tonnes of idle gold lying with households and temples worth about Rs.52 lakh crore into the banking system. Along with this, the Prime Minister would also launch the gold bond scheme and the Indian gold coin scheme.
Ahead of the formal launch of the gold monetisation scheme, RBI issued guidelines for the scheme. The scheme will allow banks to fix their own interest rates on gold deposits. The designated banks will accept gold deposits under the Short Term Bank Deposit (STBD- 1-3 years) as well as Medium (5-7 years) and Long Term (12-15 years) Government Deposit Schemes.
PM Modi officially launched the three schemes for gold monetisation in India. As a part of the 3 schemes introduced, banks will accumulate gold for up to 15 years to auction them off or lend to jewellers. The banks will give interest at the rate of 2.25-2.50% per year. PM said the women of India would be significant in making the scheme work.
Indian government's Gold Bond Scheme did not initiate much response with the banks having managed to collect a small Rs.150 crores (from the 400gms gold collected) under the initiative. The principal reason for this paltry collection is the increased issuance price. The RBI has fixed it at Rs.2,684 a gram, which is higher than the market price and hurt the scheme the most.
The world's richest Hindu temple, the Tirupati Temple in Andhra Pradesh, could subscribe to Narendra Modi's plan to recycle idle gold and cut economy-hurting imports. Tirupati earns an interest of 1% on its deposited gold with banks, but the new scheme's offer of 2.5% interest annually could see the temple trust invest in Modi's scheme. Tirupati could contribute up to 5.5 tonnes of gold.