RBI asks banks to aggressively market gold deposit scheme

Chandra Shekhar

New Delhi, April 14 : The Reserve Bank of India (RBI) wants commercial banks to aggressively market the gold deposit scheme, which was launched with much fanfare about one-and-half-year back, but, evoked poor response.

According to finance ministry officials, “The RBI has urged the banks to give more publicity to the scheme” that seeks to channelise the gold lying dormant with public and institutions, for productive purposes.

As per the official estimates, the gold mobilised under the deposit scheme till January 31, totalled 6,179 kg. Out of the total gold mobilised, State Bank of India (SBI) accounted for 5,796 kg. The Corporation Bank mobilised 227 kg followed by Indian Overseas Bank 136 kg, Allahabad Bank and Canara Bank 10 kg each.

The gold deposit scheme, which was announced in the Budget, was notified by the government on September 14, 1999. The RBI later issued the operation guidelines and authorised the banks to formulate their own gold deposit schemes.

Although one-and-half-year has passed, the scheme has yet to pick up momentum. Not only that, many of the large public sector banks, with the exception of the SBI, have yet to formulate, launch and aggressively market the scheme.

When the scheme was notified, it was hoped that individuals and trusts would deposit the gold with the banks and earn interest on such deposits. They will be paid back in gold at the expiry of the deposit period. The scheme was also aimed at reducing country’s reliance on import of gold and freeing owners from the problem of storage, movement and security of gold in their possession.

The scheme and, more significantly, the possibility of earning interest, however, failed to prompt individuals to give up the traditional preference of holding yellow metal. The other reason for poor response of the scheme is cost of converting and re-converting gold.

As far as trusts and temples are concerned, they need approval of the state governments to deposit gold in the scheme. The state governments have reportedly adopted a cautious approach in awarding permission to the temples and trusts to deposit gold with the banks.

The finance ministry officals, however, are hopeful that the scheme which is still in its nascent stage, will pick up with banks devising necessary systems and strategies for aggressively marketing the scheme.