RBI liberalises norms for the Gold Monetisation Scheme

The Reserve Bank of India (RBI) has liberalised the norms for Gold Monetisation Scheme and has directed all lenders to promote and publicise the Gold Monetisation Scheme (GMS) from their branches. This underscores the intent of the RBI to make the Scheme a success.

Changes brought in by the RBI

The changes brought in by the RBI allow the depositors to directly deposit their bullion with either of the banks, refiners or collection and purity testing centres (CPTCs). The current scheme mandates that customers have to first approach the CPTCs which are approved by the Bureau of Indian Standards.

Why Changes were introduced?

• Earlier the depositors were required to deposit the gold at the collection and purity testing centres (CPTCs). Upon deposit at these centres, they issued depositors purity certificate on gold deposited. Based on the centres’ certificate, the banks were supposed to open a deposit account and credit gold.
• CPTCs sent the gold to a refinery which gave the final purity certificate and converted the yellow metal into bars.
• Banks, CPTCs and refineries were required to sign a tripartite agreement for this. Banks were concerned about the creditworthiness of CPTCs and were not comfortable in dealing with them for GMS. Hence the RBI has now issued a circular which allows banks to accept the deposit of gold at designated branches at their discretion.
• The new norms also allows the depositors to deposit their gold directly with the refiners that have facilities to carry out final assaying and to issue the deposit receipts of standard gold of 995 fineness to the depositor.

Gold Monetisation Scheme

The Gold Monetisation Scheme has been launched in 2015 with the tagline Earn, while you secure. The scheme provides the dual benefit of interest (denominated in gold) on the gold deposited and the option of encashing the gold at maturity. All the scheduled commercial banks except the RRBs are authorised to implement the scheme.

The gold deposits can be made under 3 term deposit plans:

• Short term:1 to 3 years
• Medium term:5 to 7 years
• Long term:12 to 15 years

Short-term deposit rates are decided by the banks concerned, while the medium and long-term deposit interest rates are decided by the Central Government.

The minimum deposit one can make in a gold monetisation scheme is 30 grams of any purity and there is no maximum limit. The capital gains from the scheme are exempted from the capital gains tax, wealth tax and income tax.

The entities allowed to deposit gold under the scheme include Resident Indians [Individuals, HUFs, Proprietorship & Partnership firms, Trusts including Mutual Funds/Exchange Traded Funds registered under SEBI (Mutual Fund) Regulations, Companies, charitable institutions, Central Government, State Government or any other entity owned by Central Government or State Government].