The scheme was launched on November 19, 1999. Since then, 15 months have passed and the SBI has barely managed to collect 5.7 tonne of gold, while four other banks (Corporation Bank, Allahabad Bank, Indian Overseas Bank and Canara Bank) some 400 kg; taking the total gold collection under the scheme to just around 6.1 tonne - grossly lower than the targeted 100 tonne in the very first year of its launch.

Interestingly, hardly 300 kg of the gold collected under the scheme is known to have been lent to bullion traders, exporters and jewellers, thus, leaving 5.8 tonne of yellow metal (of 6.1 tonne collected) as lying idle in the banks' vaults.

The banks hoped to earn around 8 per cent to 9 per cent interest on the lent gold. The un-lent gold is thus a burden on the State Bank of India and the other banks which will have to pay some 4 per cent interest on the value of gold collected under the scheme. Soon in effect, the SBI and other banks will incur a loss of more than 5 per cent instead of earning interest.

If the targeted 100 tonne of gold was collected under the scheme, the government and the State Bank of India officials had hoped to use the stock of yellow metal to utilise the same for reducing the overall import of gold and also use it for developmental programmes.

So, even when the much-hyped Gold Deposit Scheme is known to have been miserably failed, Andhra Pradesh Chief Minister Chandrababu Naidu had launched the very same scheme in Andhra Pradesh on December 14 at Jubilee Hall in Hyderabad.

As was the norm, Mr Naidu while inaugurating the scheme exhorted his people to use their idle gold stocks for aiding the national development.

Also, he had said that if people joined the scheme, the imports of gold would come down considerably and jewellers would be able to source their stocks at cheaper rate.

Given the huge - around 400 tn - worth of gold lying in the temples of Andhra Pradesh alone (Tirupati Balaji temple is known to have the largest stock of such gold in its vaults), it was hoped that the temple gold stocks can earn interest money instead of incurring heavy expenditure for its security.

Estimates say a total of 1.4 lakh tonne of gold is said to be in private holdings world over. In India, it is believed to be around 13,000 tonne which in other words mean a stock holding worth over Rs 6 lakh crore! Despite the existence of such this large private holding, India continues to import about 700 tonne of gold annually.

There are only 15 temples which have come forward to join the scheme in addition to about 3,500 other private gold stock holders who have shown negligible interest in the scheme in depositing their stocks.

The failure indicates that the bank officials had grossly failed in understanding the psyche of the Indian masses besides gauging the mood. The bank officials also failed in lending the gold deposits to jewellers at a higher rate.

One of the main reasons for this failure was the lack of facilities for melting the jewellry, testing its purity and converting it into gold bars. Surprisingly, the State Bank of India and other banks had incurred heavy expenditure on converting the deposited jewellry into pure gold bars for storing gold in identical form.

Secondly, the failure of understanding the psyche of Indian masses, who prefer to possess gold in the form of jewellry however low the quantity may be. For them gold in any form is an investment that comes handy on a rainy day.

Thirdly, the absence of any amnesty scheme attached with the scheme too was said to be the major reason for hoarders of gold to keep away from participating in the scheme.

There may be other reasons as well. But the most important fact is that the Indians hardly trust the bank's report about the purity of their jewellry, especially in the absence of the facilities for melting and purifying at the bank's end.

Even the scheme was not publicised suitably and people did not know about its existence, especially in the interior parts of the country where most private gold holdings are known to be kept. There were hardly any guidelines relating to the lending of the gold stocks to traders and jewellers and how would they utilise such stocks besides the absence of specific time frame in which it was suppose to be returned to the bank.

The entire scheme was therefore, drawn up hastily and implemented without understanding the market properly and hence the rosy 100 tonne worth collection remained only on paper.

The failed scheme however, can be converted into a successful one if the immunity is added and the prevalent shortcomings are ironed out.