Gold monetisation, bond schemes to be launched in Nov

By: | Published: October 6, 2015 1:06 AM

The government on Monday said the proposed schemes on gold monetisation and sovereign gold bonds would be launched next month...

The government on Monday said the proposed schemes on gold monetisation and sovereign gold bonds would be launched next month, as they aimed to widen investment options for individuals as well as households and also discourage imports of the precious metal. “We are working out the details. We have had meetings with the RBI. Both schemes will be launched in November,” economic affairs secretary Shaktikanta Das told reporters.

Das added that the government would also release sovereign gold coins, adorned with the image of the Ashok Chakra, soon. State-run MMTC has initiated action for this purpose. Earlier, the coins were to be launched on October 2.

Last month, the Cabinet had approved the schemes on gold monetisation and bonds. While the monetisation schemes aims to tap household gold stocks of around 22,000 tonne, through the bond scheme, the government wants to shift part of the estimated 300 tonne of physical gold bars and coins purchased every year for investment into the ‘demat’ gold bonds so that the impact of huge imports on trade balance can be contained on a sustainable basis.

Although the government has said it would decide on the interest on gold bonds and allow banks to do so on the gold monetisation scheme, analysts believe a 2-3% interest rate can be offered to make the schemes attractive. Both schemes and sovereign gold coins were proposed in the Budget for 2015-16 by finance minister Arun Jaitley.

However, while depositors want attractive interest rates, banks seek regulatory exemption in the form of reserves benefits and the government is unwilling to relax KYC norms for depositors and may even ask them to reveal the source of the bullion. Unless these issues are addressed practically, the monetisation scheme risks being a damp squib, like the one in 1999 which generated only 15-20 tonne in all these years.

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