SBI chairman GG Vaidya told reporters that the Gold Deposit Scheme has beenformulated in a manner to make it customer friendly. From the Delhi circlesalone, SBI has been offered 100 kgs of gold already. The minimum amount ofgold accepted has been kept at a low level of only 200 gms gross to enableeven smaller depositors to take advantage of the scheme, he added.Depositors can be individuals, Hindu Undivided families, trusts as alsocompanies.

The deposits will be accepted for periods ranging from 3 to 7 years, and theinterest offered ranges presently from 3 per cent to 4 per cent. Liquiditywill be provided through the facility of Rupee loans against the GoldDeposits, as also the facility of premature encashment after an initial lockin period of one year.

The certificate issued under the scheme will be transferable by endorsementand delivery and there is a possibility of development of a secondary marketalso, said Vaidya. The SBI gold certificates are also available in thedenominations of 100 gms and 1000 gms to facilitate this, he added.

The bank is also offering statement of account/passbook in lieu ofcertificates at the option of the depositors. It has also provided thenomination facility.

The depositors will have the option of taking interest annually or onmaturity with annual compounding. While the interest will be payable inrupees, the depositor will receive back the same quantity of net gold asdeposited. The depositor will also have the option of encashing principal inrupees at the time of redemption at the then prevalent price.

The government has exempted the interest earnings on SBI Gold Deposit Schemefrom Income tax, the gold deposited under the scheme from Wealth tax and theappreciation of the value of the deposit from Capital Gains tax. There willbe no immunity, however, said Vaidya.

Under the scheme, the depositor can go to the bank with a minimum of 200grams gross of jewellery or bullion - the bank will get the gold assayed andissue a deposit certificate ranging from three to seven years bearing 3 to 4per cent interest.

Initially, the scheme is being offered in 13 cities of Ahmedabad,Bbangalore, Bhopal, Bhubaneswar, Calcutta, Chandigarh, Chennai, Guwahati,Hyderabad, Lucknow, Mumbai, New Delhi and Patna. But at a later stage, SIplans to extend it to other cities as well.

To provide a proper infrastructure for gold related activities, SBI isforming a subsidiary - SBI Gold and Precious Metals Pvt Ltd - with 51 percent equity for offering assaying. This will be a joint venture company withAllahabad Bank, Canara Bank and Corporation Bank besides Credit SuisseFinancial Products, London. RBI permission has already been obtained for thejoint venture.