The Government of India has proposed a new Gold Deposit Scheme in its Budget for 1999-2000. The purpose of the Scheme was to mobilize idle gold lying with people/institutions like temple in India and utilize the same for productive purposes through the banking system.
As per the scheme announced in September/October 1999 selected commercial banks are permitted to accept gold deposits from individuals, trusts and companies in the form of gold coin, jeweler, ornaments, gold bars, etc.
The banks after ascertaining their gold content through the process of assaying will issue interest bearing gold bonds or pass books to the depositors. The depositors at the maturity of the bond will get back same quantity of gold or its equivalent value in rupees.
Interest amount will be paid separately and it is exempted from income tax. Gold value is exempted from Wealth Tax. One of the purposes of the scheme is to reduce the import of gold from abroad.
ADVERTISEMENTS:
In 1998-99 India imported 540 tonnes of gold through official channels. Non-Resident Indians are also permitted to bring with them 10 kgs of gold subject to certain conditions when they come to India.
The scheme is beneficial to holders of gold as it provides safety and security to their gold holdings besides a regular interest income thereon. The deposit will be for a period between 3 and 7 years. The Gold Deposit Bond is transferable by endorsement and delivery as in the case with Negotiable instruments.
Nomination facility is also available as in the case with bank deposit accounts. Specific approvals from Reserve Bank are required for banks to operate the scheme.
The rate of interest, repayment period of deposit and other operational details will be decided by each designated bank. State Bank of India is the first designated bank for this purpose. Some more nationalized banks like Ganara Bank may also seek RBI permission to operate the scheme.
ADVERTISEMENTS:
The banks mobilizing gold deposit under the Scheme may utilize such gold for the following purposes:
Indian Banking (Theory)
(a) Gold loans to domestic jewellery industry
(b) Gold loans to jewellery exporters
ADVERTISEMENTS:
(c) For sale in domestic market