RBI simplifies gold monetization scheme

New Delhi, Jan 12: The Reserve Bank of India has simplified the Gold Monetisation Scheme (GMS) for bulk depositors, aimed to help temple boards to do so. And, has allowed banks to sell Ashok Chakra-embossed gold coins manufactured by government-owned MMTC under the ‘India gold coin’ scheme.

In a circular issued on Thursday, the central bank said: “Banks may accept the deposit of gold at designated branches, especially from larger depositors. Banks can also allow the depositors to deposit their gold directly with the refiners” with whom the bank had already signed an agreement for the scheme. Such a refinery “can issue the deposit receipts to the depositor”.

This was a major demand of temple trusts, many having tonnes of gold and willing to deposit part of that under the GMS. Now these depositors need not move gold to a collection centre which could be far away from their storage. Banks may open a branch in an area nearby or the refinery can offer this facility directly to the trust.

When government launched GMS, the eye was especially on such trusts, such as the Tirupati Devasthanam or the Siddhi Vinayak one in Mumbaii. In another important clarification which brings GMS in sync with the gold bond scheme, the interest rate for medium and long-term gold deposits will be calculated in rupees and the value will be the prevailing one at the time of making a deposit.

RBI said the principal and interest on a short-term deposit shall be denominated in gold. In the case of medium-term and long-term deposits, the principal will be denominated in gold but the interest calculated in rupees, with reference to the value of gold at the time of the deposit.

RBI has also prescribed a procedure for interest calculation in the case of a premature withdrawal by medium or long-term depositors under GMS, after the minimum lock-in period. Such a withdrawal will attract a penalty, in the form of a lower rate of interest.

The current rate of interest on a medium-term gold deposit is 2.25 per cent annually; for a long-term one, 2.5 per cent. The government, said the circular, might change these if needed at a future date. The lock-in period for medium-term deposits will be three years; for long-term ones, five years. The principal and interest rate on short-term deposits, essentially bank deposits, will be denominated in gold. Medium and long-term gold deposits will be treated as government borrowing.