The industry chamber has mooted a proposal in this regard to the finance minister, nudging him to consider unveiling it in the upcoming Union Budget.
"The gold bank would procure and retain gold abroad through offshore foreign currency borrowing. Using this gold from the gold bank, scheduled commercial banks can offer gold deposit account to their retail customers. finance minister could consider announcing it with the Budget," Assocham president Rana Kapoor said.
The gold deposit account (GDA), which will carry most of the features of a savings bank account, is conceptually different from the initiatives taken earlier to mobilise gold in the economy.
It will have the option of being funded by currency deposit (in Rupee) as well as by non-jewellery physical gold from the customer. Hence it will help in financing the incremental demand for gold as well as the existing stock of non-jewellery physical gold within India, Assocham said.
The GDA will represent notional units of gold and provide gold price return in weight terms, which will be a deterrent to retail demand for physical gold. This has the potential to defer the need for import of physical gold.
"Given the inherent cultural appetite for gold in India along with its feature of being a natural hedge against inflation, policy efforts should be directed towards incentivising residents to defer the procurement of physical gold, which in turn, would defer gold imports to an extent possible," Kapoor said.
According to him, after a bank creates GDA for its customer, the physical gold collected from the customer is exported after maintaining adequate inventory. The Bank in return, credits the customer's account with units of gold, which reflects price returns overtime through the channel of Participation Certificate issued by the gold bank.
The Participation Certificate can be acquired by the bank after it converts its export receivables from gold and deposits the Rupee equivalent with the gold bank, he said.