The Finance
Minister in his budget speech for the Union Budget 2015-16 made the following
announcement:
"India
is one of the largest consumers of gold in the world and imports as much as
800-1000 tonnes of gold each year. Though stocks of gold in India are estimated
to be over 20,000 tonnes, most of this gold is neither traded, nor monetized.
Keeping this in view, the government in Budget 2015-16 has announced the Gold
Monetization Scheme which will replace both the present Gold Deposit and Gold
metal Loan Schemes. The new scheme will allow the depositors of gold to earn
interest in their metal accounts and the jewellers to obtain loans in their
metal account. Banks/other dealers would also be able to monetize this
gold".
Accordingly,
a draft outline of the Scheme has been prepared. Comments and views are invited
on the Draft Gold Monetization Scheme.
(The outline
of the Gold Monetization Scheme placed below is only at the draft stage and is
being placed here to obtain public opinion. The scheme as it stands at this
stage, does not imply any commitment from the government)
I. Objective
The objectives of the Gold Monetization scheme are:
i. To
mobilize the gold held by households and institutions in the country.
ii. To
provide a fillip to the gems and jewellery sector in the country by making gold
available as raw material on loan from the banks.
iii. To be
able to reduce reliance on import of gold over time to meet the domestic
demand.
II.
Scope
The scheme requires a vast set-up of infrastructure for
facilitating easy and secure handling of gold. For this reason, it may be
possible to launch it initially only in selected cities. Over time, as the
infrastructure for assaying and refining of gold develops, the scheme can be
extended to other cities.
III. Scheme
The draft
outline of the scheme detailed in this section, has been prepared after due
deliberations and consultations with various stakeholders which includes banks,
refineries, hallmarking centres, jewellers’ associations; RBI; and various
government departments.
Draft GMS
I.
Purity
Verification and Deposit of Gold
Purity
Testing Centres: There are at present 350 Hallmarking Centres that are Bureau
of Indian Standards (BIS) certified spread across various parts of the country
(List of the number of centres in each states is at Annexure-II). These centres
may not necessarily be jewellers. They are engaged in certifying the purity of
the gold that the jewellers manufacture on a daily basis and for which they
charge a fee from the jewellers. These Hallmarking Centres will act as ‘Purity
Testing Centres’ for the GMS as they are well equipped to conduct a test of
purity of the jewellery in a short span of time.
Preliminary
Test: In a Purity Testing Centre, a preliminary XRF machine-test
will be conducted to tell the customer the approximate amount of pure gold. If
the customer agrees, he will have to fill-up a Bank/KYC form and give his
consent for melting the gold. If the customer does not agree to the XRF machine
test, he can take his jewellery back at this stage. The time spent by the
customer will be about 45 minutes in the centre up till this stage.
Fire Assay
Test: After receiving the customer’s consent for melting the gold
for conducting a further test of purity, at the same collection centre, the
gold ornament will then be cleaned of its dirt, studs, meena etc. The studs
will be handed-over to the customer there itself. Net weight of the jewellery
will be taken after such removals and told to the customer.Then, right in front
of the customer the jewellery will be melted and through a fire assay, its
purity will be ascertained. These centres have viewing galleries from where the
customer can see the entire process. The time taken is expected not to exceed
3-4 hours.
Deposit of
Gold:When the
results of the fire assay are told to the customer, he has a choice of either
refusing to accept, in which case he can take back the melted gold in the form
of gold bars, after paying a nominal fee to that centre; or he may agree to
deposit his gold (in which case the fee will be paid by the bank). If the
customer agrees to deposit the gold, then he will be given a certificate by the
collection centre certifying the amount and purity of the deposited gold.
Conditions:The minimum quantity of gold that a
customer can bring is proposed to be set at 30 grams, so that even small
depositors are encouraged. Gold can be in any form(bullion or jewellery).
1 The
details of the fees as received from the Indian Association of Hallmarking
Centres are given at end. These are only indicative and may change after
the consultative process is over.
II.
Opening of Gold Savings Account with the banks.
Gold Savings
Account: When the customer produces the certificate of gold deposited
at the Purity Testing Centre, the bank will in turn open a ‘Gold Savings
Account’ for the customer and credit the ‘quantity’ of gold into the customer’s
account. Simultaneously, the Purity Verification Centre will also inform the
bank about the deposit made.
Interest
payment by banks: The bank will commit to paying an interest to the customer
which will be payable after 30/60 days of opening of the Gold Savings Account.
The amount of interest rate to be given is proposed to be left to the banks to
decide. Both principal and interest to be paid to the depositors of gold, will
be ‘valued’ in gold. For example if a customer deposits 100 gms of gold and
gets 1 per cent interest, then, on maturity he has a credit of 101 gms.
Redemption: The customer will have the option of
redemption either in cash or in gold, which will have to be exercised in the
beginning itself (that is, at the time of making the deposit).
Tenure: The tenure of the deposit will be
minimum 1 year and with a roll out in multiples of one year. Like a fixed
deposit, breaking of lock-in period will be allowed.
Tax
Exemption: Transfer of Gold to the Refiners In the Gold Deposit Scheme
(1999), the customers received exemption from Capital Gains Tax, Wealth tax and
Income Tax. Similar tax exemptions are likely to be made available to the
customers in the GMS after due examination.
III.
Transfer of Gold to the Refiners
Refineries: At present there are about 32
refineries in the country. The laboratories of some of these refineries are
NABL accredited which means that the process that they adopt is certified.BIS
has been asked by this Department to ascertain if it can conduct accreditation
of the products being produced in these refineries also.
Transfer of
gold to refineries: Purity Testing Centres will send the gold to the refiners.
The refiners will keep the gold in their ware-houses, unless the banks prefer
to hold it themselves.
Payment:For the services provided by the
refiners, they will be paid a fee by the banks, as decided by them, mutually.
IV.
Utilization of Deposited Gold
CRR/SLR :To incentivize banks, it is proposed
that they may be permitted to deposit the mobilized gold as part of their
CRR/SLR requirements with RBI. This aspect is still under examination.
Foreign Currency: Banks may sell the gold to
generate foreign currency. The foreign currency thus generated can then be used
for onward lending to exporters / importers.
Coins: Bank may convert mobilized gold into
coins for onward sale to their customers
Exchanges: Banks to buy and sell on domestic
commodity exchanges, where mobilized gold can be delivered.
Lending to
jewellers: For lending to jewellers
V. Lending
the Gold to the Jewellers
Gold Loan
Account: The jewellers, on the basis of the terms and conditions of the banks,
will get a Gold Loan Account opened at the bank.
Delivery of
gold to jewellers: When a gold loan is sanctioned, the jewellers will
receive physical delivery of gold from the refiners. The banks will in turn
make the requisite entry in the jewellers’ Gold Loan Account.
Interest
received by banks: Interest rate paid to the depositors of gold The interest
rate charged by the banks will have to cover the following:
- Fee paid to the refiners and Purity Verification Centres.
- Profit margin of the banks
- The banks can directly get gold from the international market on a consignment basis and lend it to the jewellers. If this route is more lucrative, then the entire purpose will get defeated. Thus, this aspect will also have to be kept in mind, while deciding the interest rate.
VI. MoU
between Banks, Refiners and Purity Testing Centres
• The banks
will enter into a tripartite MoU with refiners and purity testing centres, that
are selected by them to be their partners in the scheme.
• The MoU
will clearly lay down the details regarding payment of fee, services to be
provided, standards of service and the details of the arrangements between the
banks, refiners and purity testing centres.
SCHEDULE OF
FEES
1) Melting
charges :
- a) Minimum charges/upto 100 gms - Rs. 500 per lot
- b) 100 gms to 200 gms - Rs. 600
- c) 200 gms to 300 gms - Rs. 700
- d) 300 gms to 400 gms - Rs. 800
- e) 400 gms to 500 gms - Rs. 900
- f) 500 gms to 600 gms - Rs.1000
- g) 600 gms to 700 gms - Rs. 1100
- h) 700 gms to 800 gms - Rs.1200
- i) 800 gms to 900 gms - Rs.1300
- j) 900 gms to 1000 gms - Rs.1400
2)
Testing/fire assaying charges - Rs. 300
3) Stone
removal charges - at actuals Minimum charge - Rs. 100
4) Melting
loss - at actuals (Information as received from Indian Association of
Hallmarking Centres-this is only indicative and is subject to change after
consultations)
