RBI issues direction on implementation of Gold Monetisation Scheme (GMS), 2015
Press Releases
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The
Reserve Bank of India today issued a Direction to all Scheduled
Commercial Banks (excluding Regional Rural Banks) on implementation of
the Gold Monetisation Scheme, 2015 notified by the Central Government.
The Scheme
The GMS will replace the existing Gold Deposit Scheme, 1999.
However, the deposits outstanding under the Gold Deposit Scheme will be
allowed to run till maturity unless the depositors prematurely withdraw
them.
Resident Indians (Individuals, HUF, Trusts including
Mutual Funds/Exchange Traded Funds registered under SEBI (Mutual Fund)
Regulations and Companies) can make deposits under the scheme.
The minimum deposit at any one time shall be raw gold (bars, coins,
jewellery excluding stones and other metals) equivalent to 30 grams of
gold of 995 fineness. There is no maximum limit for deposit under the
scheme. The gold will be accepted at the Collection and Purity Testing
Centres (CPTC) certified by Bureau of Indian Standards (BIS) and
notified by the Central Government under the Scheme. The deposit
certificates will be issued by banks in equivalence of 995 fineness of
gold.
The principal and interest of the deposit under the scheme will be denominated in gold.
The designated banks will accept gold deposits under the Short Term
(1-3 years) Bank Deposit (STBD) as well as Medium (5-7 years) and Long
(12-15 years) Term Government Deposit Schemes. While the former will be
accepted by banks on their own account, the latter will be on behalf of
Government of India. There will be provision for premature withdrawal
subject to a minimum lock-in period and penalty to be determined by
individual banks.
Interest on deposits under the
scheme will start accruing from the date of conversion of gold deposited
into tradable gold bars after refinement or 30 days after the receipt
of gold at the CPTC or the bank’s designated branch, as the case may be
and whichever is earlier.
During the period from the date
of receipt of gold by the CPTC or the designated branch, as the case may
be, to the date on which interest starts accruing in the deposit, the
gold accepted by the CPTC or the designated branch of the bank shall be
treated as an item in safe custody held by the designated bank.
Reserve requirements
The
short term bank deposits will attract applicable cash reserve ratio
(CRR) and statutory liquidity ratio (SLR). However, the stock of gold
held by the banks will count towards the general SLR requirement.
KYC to apply
The opening of gold deposit accounts will be subject to the same
rules with regard to customer identification as are applicable to any
other deposit account.
Utilisation of gold mobilised under GMS
The designated banks may sell or lend the gold accepted under
STBD to MMTC for minting India Gold Coins (IGC) and to jewellers, or
sell it to other designated banks participating in GMS. The gold
deposited under MLTGD will be auctioned by MMTC or any other agency
authorised by the Central Government and the sale proceeds credited to
the Central Government’s account with the Reserve Bank. The entities
participating in the auction may include the Reserve Bank, MMTC, banks
and any other entities notified by the Central Government. Banks may
utilise the gold purchased in the auction for purposes indicated above.
Risk Management
Designated banks should put in place a suitable risk management
mechanism, including appropriate limits, to manage the risk arising from
gold price movements in respect of their net exposure to gold. For this
purpose, they have been allowed to access the international exchanges,
London Bullion Market Association or make use of over-the-counter
contracts to hedge exposures to bullion prices subject to the guidelines
issued by the Reserve Bank.
Grievance redress
Complaints against designated banks regarding any discrepancy in
issuance of receipts and deposit certificates, redemption of deposits,
payment of interest will be handled first by the bank’s grievance
redress process and then by the Reserve Bank’s Banking Ombudsman.
It may be recalled that the Government of India announced the Gold
Monetisation Scheme vide its Office Memorandum F.No.20/6/2015-FT dated
September 15, 2015. The objective of the Scheme is to mobilise gold held
by households and institutions of the country and facilitate its use
for productive purposes, and in the long run, to reduce country’s
reliance on the import of gold. The Reserve Bank has issued the
Direction to banks in exercise of powers conferred on it under Section
35 A of the Banking Regulation Act, 1949.
The list of CPTCs
and Refiners is under finalization and will be notified by Central
Government soon. Indian Banks Association is finalizing the necessary
documentation including the tripartite agreements to be entered into by
the designated banks, CPTCs and the Refiners under the Scheme. Banks are
also putting in place the requisite systems and procedures to implement
the scheme. The exact date of implementation will be announced by RBI
in the next few days.
Alpana Killawala
Principal Chief General Manager
Press Release : 2015-2016/974
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