RBI is of the view that banks should consider only gold with the hallmark seal, a standard developed by the Bureau of Indian Standards, to improve the quality of the gold put under the scheme. But a final decision is yet to be taken, sources said.
SBI sources have confirmed that a process in this regard is already underway. Deposit mobilisation under the scheme has also slowed down substantially due to these problems, they said.
SBI has over 96 per cent market share in the country, with a hefty 6.8 metric tonne gold deposits.
However, neither RBI, nor SBI is interested in discontinuing the scheme, the sources added. SBI re-lends the gold under gold account scheme at 5.5-6 per cent rate, while it pays at about 3.5-4 per cent to depositors. Though the margin is small, the scheme cannot be termed commercially unviable, sources said.
The main problem stalking the scheme is at the time of issuing a precise certificate to the depositor on the weight and value of his/her jewellery. Most of the jewellery deposited under the scheme are proving to be of lesser quality than which is mentioned. The fact comes to light while assaying and after removing the impurities, sources pointed out and said, in most of the cases, gold being deposited with the bank as 22/24 carat is proving to be of only between 18-20 carats. As such, ascertaining the value at the time of the deposit has become a difficult task. When we bring out the fact that gold is of lesser quality it leads to unhappiness and misunderstanding with customers.
On the other hand, gold in the form of bullions is not allowed to be deposited under the scheme, thus, ruling out the possibility of ensuring better quality by the banks. Some of the depositors are also unable to digest the fact that the shape of their jewellery changes during the assaying process, the sources said.