With over 900 kilogram of gold deposited under the gold monetisation scheme, the government has further relaxed norms that would benefit both depositors and banks.
The modified guidelines allow premature redemption under medium and long term deposits, allowing withdrawals after a period of three years and five years respectively. Earlier, withdrawals could be made only after a period of five to seven years for medium term deposits and 12 to 15 years for long term deposits.
“These will be subject to a reduction in the interest payable,” said the Finance Ministry on Sunday, adding that the Reserve Bank of India has issued a master direction on the revamped scheme on January 21.
Banks would also be free to hedge their positions in the case of short-term deposits, it said. Further, banks would earn a commission of 2.5 per cent for their services including gold purity testing charges, refining, storage and transportation charges on medium and long term deposits.
While a total of 900.087 kg of gold has been mobilised through the scheme by January 20, banks are understood to have been worried about the costs involved in the scheme. The government also wanted to make it more popular with customers, given that it wants to mobilise 20,000 tonne of idle gold in the country.
To encourage bulk depositors including institutions, the government has now allowed deposits to be made directly to the refiners rather than just the collection and purity testing centres (CPTC).
Additionally, the Bureau of Indian Standards (BIS) is working to increase the number of refiners and CPTCs under the scheme to expand its reach.
As an extra incentive to customers, the Finance Ministry said that gold of any purity can be deposited with the CPTCs and the refineries, which will then test its purity and issue the deposit certificate. Further, to give the best value of the gold deposited by the customer, it will be expressed up to three decimals of a gram.
“It is again clarified that tax exemptions under the scheme include exemption of interest earned on the gold deposited and exemption from capital gains made through trading or at redemption,” said the Finance Ministry, adding that gold jewellery to the extent of 500 grams per married lady, 250 grams per unmarried lady and 100 grams per male member of the family, need not be seized by tax authorities.