Highlights of the two gold schemes approved at a cabinet meeting chaired by Prime Minister Narendra Modi:
Key points of gold deposit scheme
- Minimum amount of gold set at 30 grams
- The 331 designated centres to test and collect gold from customers
- Gold can be in any form, bullion or jewellery
- A Gold savings account to be opened by customers
- Account to be denominated in grams of gold
- Centres to transfer gold to refiners
- Refiners to keep the gold in ware-houses unless banks want to hold themselves
- Refiners to be paid a mutually-decided fee by banks
- Customer will not be charged.
- Scheme available for short-, medium-, long-term periods
- Lock-in period can be broken with penalty
- Interest rate for short-term deposits to be decided by banks
- For medium- and long-term deposits, interest rate to be decided by government
- Interest rate to be denominated and payable in rupees, based on gold value
- Redumption of short-term deposits in cash or in gold
- But fractional quantity to be paid in cash
- Redumption of medium and long-term deposits only in cash
- Deposited gold can be utilised for auctioning, Central bank's gold reserves, coins, lending
- Tax exemptions will also be extended as applicable
- Gold reserve fund to be created based on borrowing cost interest rate paid
- For jewellers, a gold metal loan account can be opened, denominated in grams of gold
- Gold mobilized under short-term option to be provided to jewellers on loan
- Delivery of physical gold for jewellers once sanctioned.
Key points of sovereign gold bond scheme
- Bonds to be issued on payment of rupees and denominated in grams of gold
- They will will have a sovereign guarantee
- Issuing agency to pay distribution costs and commission to intermediaries
- These will be reimbursed by the government
- Scheme restricted to resident Indian entities
- The cap on bonds per annum no more than 500 grams per person
- Rate of interest to be decided by government, based on market conditions
- Bonds in dematerialised and paper form
- Denominations of 5, 10, 50, 100 grams of gold
- Price may be drawn from reference rate of the central bank towards the scheme
- Notified agencies, like banks, post offices, and non-banking firms may collect/reem money
- The tenor of the bonds for five-seven years
- Bonds can also be used as collateral for loans
- Bonds to be easily sold and traded on exchanges
- Capital gains tax same as that for physical gold for individuals
- Capital gains tax to adjust for inflation
- Amount received can be used by government like borrowings
- On maturity, redemption in rupee amounts alone
- Interest rate to be calculated on value of gold at investment
- Principal amount to be redeemed at the then price of gold
- If price has since fallen, depositor can roll-over the bond for three or more years
- Deposit will not be hedged and all risks will be borne by government
- But position may be reviewed in case "Gold Reserve Fund" becomes unsustainable
- Bonds to b sold by post offices, banks, non-banking firms, upon commission.
