The industry today welcomed the government's approval of Gold Monetisation and Sovereign Gold Bond schemes saying it will give a positive boost to the industry and help reducing imports.
The industry today welcomed the government’s approval of Gold Monetisation and Sovereign Gold Bond schemes saying it will give a positive boost to the industry and help reducing imports.
“The Union Cabinet’s announcements reflect both, a very practical approach and a long term view of gold. The Gold Monetisation scheme will drive orderly recycling and enhance transparency, benefiting millions of households and the macro economy, as it has the potential to translate gold savings into economic investments,” World Gold Council, India, Managing Director Somasundaram PR said.
He said the question is no longer whether the scheme will work, but how to make it attractive for customers.
The scheme must be well-marketed, promoting the attractive features that individual banks may include in the design of their offer within the monetisation framework to ensure that the household savings in gold can be tapped by the banking industry.
This will pave the way for a more active and larger role for Indian banks in bullion.
It is also a step towards gold becoming an integral part of the larger financial system and a fungible asset class in its own right, he added.
All India Gems and Jewellery Trade Federation (GJF) former director Bachhraj Bamalwa opined that it is a positive step for the jewellery industry, which will not only benefit the jewellers but also the consumer and the government.
“The consumers will get benefit through the interest they get from the government and will lend it to the industry. The industry will also get stock easily and the imports will come dowm, hence, it’s a win-win situation for all,” Bamalwa added.
P N Gadgil Jewellers Managing Director Saurabh Gadgil said it’s a good effort by the government which has attractive features like 2.5 per cent interest on gold for the consumer.
“This will increase the supply and the premiums will come down. The government is trying to make things more transparent. The Gold Bond scheme is also an attractive investment opportunity,” he added.
However, he said, the only deterrent might be that the deposits are only on bullion and not jewellery, which may negatively impact the scheme.
Geofin Comtrade Research Head Hareesh V said the prime objective of these plans is to curtail gold import into the country.
The Gold Monetisation scheme is aimed to mobilise the surplus gold holdings held with households and institutions as deposits.
Under the scheme, gold lying idle with people can be deposited in banks and generate interest and the return from these deposits is totally tax-free.
The deposited gold will be melted and made available for jewellers as raw material so as to restrict the increased dependence of imported gold.
In Sovereign Gold Bond scheme, instead of buying gold in physical form, investors can park their money in Bonds which are backed by gold, he added.