Government will pay banks a 2.5 per cent commission for mobilising gold under the gold monetisation scheme and depositors will be permitted premature withdrawal of the deposited metal. According to Finance Ministry, it is expected that the above modifications will make the scheme more attractive for potential depositors. Under the modified rules, government will pay the participating banks a fees for their services such as gold purity testing charges, refining, storage and transportation charges, among others, on medium and long term gold deposits.
About the scheme:-
- The monetisation scheme encourages individuals, households and temples to deposit gold jewellery or bars with banks or collection agents.
- The gold deposited would be later refined for domestic purpose and would help cut dependence on imports.
- The government has already mobilised 900 kgs of gold in over two-and-a-half months time through the scheme.
- Any Medium Term Deposit will be allowed to be withdrawn after 3 years and any Long Term Deposit after 5 years.
- These will be subject to a reduction in the interest payable.
Why it is launched??
- The scheme, launched by Prime Minister Narendra Modi on November 5, provides for tax exemptions on interest earned on the gold deposited and exemption from capital gains made through trading or at redemption.
- Further, gold depositors can now give their gold directly to the refiner rather than only through the Collection and Purity Testing Centres (CPTCs).
- To make the scheme more attractive, Bureau of Indian Standards (BIS) has modified the licensing condition for refiners from the existing three years of refining experience to one year.
India imports about 1,000 tonnes of gold every year and the precious metal is the second-highest component of the imports bill after crude oil. An estimated 20,000 tonnes of gold are lying with households and temples.
