Gold Monetisation Scheme
Introduction of New Gold Schemes in India Background The gold policy in India has been traditionally governed by the Gold Control Act, 1968, an act of the Parliament of India, which was enacted to control the sales and holding of gold in personal possession. The act stemmed from the accentuation of foreign exchange in 1962, when the Finance Ministry recalled all gold loans given by banks and banned forward trading in gold. In 1965, a gold bond scheme was launched with tax immunity for unaccounted wealth. This was the lead-up to the Gold Act of 1968, which stated that citizens are prohibited from owning gold in form of bars or coins. The act got repealed in 1990 as government embarked on the path of liberalization. In September 1999, the …show more content…
Over the past five years alone, consumers in India have bought almost 4,500 tonnes of gold and the demand is forecasted to remain buoyant for many years to come. Much of this gold remains at home. An estimated 22,000 tonnes of gold, worth more than $1 trillion is currently held in Indian households. Even if a small portion of this gold were monetized, its economic impact would be considerable. With this in mind, the government has come up with a Gold Monetisation Scheme, which states that people can deposit their gold with banks and the bank would pay interest on the deposited gold. As per traditional practices, people keep gold in the lockers, for which they have to pay the banks. With this scheme banks would be paying people to keep gold with them, this would transform gold from dead money to live power. A major upside would be that people would be incentivized to keep gold with banks rather than keeping it at …show more content…
Payment of the bonds would be under electronic funds transfer/ cash payment/ cheque/ demand draft. The investors will be issued a Stock/Holding certificate. The bonds are eligible to be converted into demat form. The redemption price of the bond will be in Indian Rupees based on previous week's simple average of closing price of 999 purity gold published by IBJA. The investors will be compensated at a fixed rate of 2.75 per cent per annum payable semi-annually on the initial value of
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