What will be better than this if you get interest on gold stored at home. That is the particular thing about the gold monetization scheme. Below this, the annual bills of the locker will be avoided together with getting interest on depositing the gold lying within the bank with the bank. Recently, the Reserve Bank of India (RBI) has made some changes to make the Gold Monetization Scheme (GMS) attractive.
Many people and institutions have deposited gold within the bank by this scheme. Many massive temples of the nation including Tirupati have also deposited gold in banks under this.
Key points
Notification has been issued by RBI for some changes within the scheme launched in 2015. After the issuance of the notification, under this scheme, now charitable establishments, Central Government, State Governments and any institution under the Central Government or State Governments may avail the benefit of this scheme. In 2015 Gold Monetization Scheme-GMS was launched.
Gold Monetization Scheme Overview | |
|---|---|
Name of the scheme | Gold Monetization Scheme |
Started by | Reserve Bank of India |
Government | central government |
Beneficiary | Each person of the country |
An objective | To reduce large-scale gold imports by India |
Start plan | 2015 |
What is gold monetization scheme?
Under the Gold Monetization Scheme-GMS, an individual (now charitable establishments, central authorities, also state government) can deposit his gold within the bank.
They get interest from 2.25% to 2.50% on it and after maturity period they’ll get it in gold or rupee. The special thing about this scheme is that earlier people used to maintain gold in a locker, but now there is no must take a locker and it additionally gets a sure interest.
Under the scheme, it’s necessary to maintain at least 30 grams of 995 purity gold in the bank. During which banks approve gold bars, cash, jewelry (with out stones and other metals).
What was the purpose?
The ‘gold-monetization scheme’ was launched to reduce large-scale gold imports by India as gold imports are a major cause of India’s trade deficit.
Under this scheme, customers of the bank can deposit their idle gold within the bank as ‘Fixed Deposit’. The government hoped that this initiative would deposit giant quantities of wasted gold in homes and temples in banks, which might be melted and supplied to jewelers and different users. Thus the import of gold can be reduced by the recycling of gold.
Plan successful or unsuccessful?
On the one hand, about 20,000 tons of gold is lying in homes and temples in India, on the other hand, the import of gold can be increasing continuously. India is the biggest importer of gold and gold imports account for more than one-fourth of India’s trade deficit.
In India, more than three-fourths of the gold stock is in the type of jewelery and sculptures, which also cause emotional attachment of people. Since the gold deposited under this scheme is melted, it’s pure for individuals to have less inclination towards this scheme.
Also, gold deposited in banks will become a part of the official economy, making it tough to deposit gold purchased with unauthorized cash and black money.
Nonetheless people are not fully conscious of this scheme and part of the public doesn’t have entry to banks due to lack of financial inclusion.
In India, gold is used as collateral for taking loans and is kept for the time of crisis. Therefore, they won’t be able to use such gold when deposited in a fixed deposit account.
Gold-monetization scheme is a progressive initiative from an economic point of view that may significantly contribute to extend the optimum use of gold by investors and reduce the nation’s trade deficit. Due to this fact, this scheme will be made successful by ensuring liquidity and capital good points of gold by the government.
Get interest up to 2.5 %
Other than this, gold may also be deposited for other periods (one year, three months, two years, 4 months, 5 days and so on.). The scheme allows bank clients to deposit idle gold for a fixed interval. The interest on this is 2.25 to 2.50 per cent.
The objective of the government to introduce gold monetization scheme was to cut back dependence on imports for the need of gold. CAD (present account deficit) of the nation increases due to increase in gold imports.
20 thousand tons of gold stock across the country
Around 20,000 tonnes of gold is saved in people’s houses in India. However due to this precious metal, the nation’s import invoice also increases. The reason for that is that the government imports gold to fulfill its requirement. But the gold lying in people’s houses and temples in the nation isn’t used within the economy. That is why the government is now giving incentives to carry this accumulated gold back into the economy.