Hyderabad: Jewellery shops and showrooms across the city have started rounding up their long-term gold installment schemes quoting the new RBI (Reserve Bank of India) guidelines for long-term gold schemes.
This has put several customers in a fix, as they are unsure whether to continue with the scheme for a shorter period or close the scheme before time and buy gold jewellery at the current rates of Rs 28,100 per 10 gram of 24-carat gold.
Moreover, as per the terms of gold schemes, customers can only purchase gold jewellery under the scheme and the money saved cannot be exchanged for money or even investment gold.
This has also left consumers with no choice except to choose jewellery items from among the designs available currently or go for larger installment amounts to complete the dues in a shorter period.
Due to a slack in gold jewellery sales over the last two years , there have been no new jewellery designs in the market for a long time and jewellers have been trying to sell off older stock.
“Due to RBI rules we have asked our customers to round up the schemes since long-term schemes of 18 month duration are not allowed anymore. Customers can either purchase gold by ending the scheme early or change it into an 11-month scheme,” said Ashok Reddy, manager jewellery section, South India Shopping Mall.
“Many jewellers, especially big brands, have collected huge amounts of deposits from consumers through these monthly installment schemes. Now, the RBI has asked them to return the amount which is why these schemes are being closed or shortened. However, going for a shorter installment period is not advisable, as it will increase the monthly EMIs. It’s better to close the scheme and purchase jewelry,” said Mohanlal Gupta, advisor to Twin Cities Gold Merchants Association.
The installments that jewelers collect from customers are now deemed as deposits. And as per RBI rules, no deposit can pay more than 12.5 per cent as return, which means that schemes of almost all companies become illegal, unless it’s collected within one year until when it is considered an advance. As a result, jewellers are going in for the 11-month scheme.
