New Delhi: To make gold monetisation scheme more attractive, the government on Friday said that it would allow deposits of over five years to be redeemed in physical gold after payment of a small processing fee.
The interest on gold deposits would, however, be paid in cash. The interest payment is on the value of gold at the time when it was deposited. On short-term deposit, the interest is 2.25 per cent while medium and long-term deposits will earn 2.5 per cent.
A fee of 0.2 per cent of notional redemption in rupees would be charged from the depositor if he or she wants their principal back in gold, a finance ministry statement said. This facility will be extended to deposits held over medium and long-term.
This facility will be available to current deposits as well as future deposits. The modification addresses concerns of some of the richest temples in India, which were vary of depositing gold under the scheme and earn interest. They kept gold in vaults of banks where it lies idle.
The executive director of the richest temple in India, Tirumala Tirupati Devasthanam (TTD), Sambasiva Rao, had said that it had requested the government to pay back its gold deposits of over three years in gold itself. Officials of Mumbai’s Siddhivinayak temple that also has huge gold holdings have made a similar demand.
Following these requests, a review meeting of the scheme was held on March 18 after which the government had said that it would make changes in rules.
Since the launch of the scheme in October laast year, around three tonnes of gold have been deposited. Though it is less than what was expected, the new scheme has performed better than erstwhile gold deposit scheme of 1999.
Under the earlier gold deposit scheme, only one tonne of gold had been mobilised. The scheme was launched to draw out gold held in vaults and use it to meet the current demand thereby reducing imports.
India imports around 1,000 tonnes of gold annually while total gold holdings by households stands at 22000 tonnes. Other scheme to reduce investment demand for gold was Sovereign Gold Bond Scheme where the response has been better.
