RBI amends Gold Monetisation Scheme to make it more attractive
8 June 2018: The Reserve Bank of India (RBI) has made differences in the Gold Monetisation Scheme (GMS) to make it more engaging. The revamping of the scheme is aimed at facilitating people to open a hassle-free gold deposit account.
The short-term deposits should be interpreted as bank's on-balance sheet liability, the RBI said in an announcement. "These deposits will be made with the selected banks for a short period of 1-3 years (with a facility of rollover). Deposits can also be approved for broken periods (e.g. 1 year 3 months; 2 years 4 months 5 days; etc.)," it said.
The interest rate payable in the case of deposits for maturities with broken periods should be determined as the sum of interest for the completed year plus interest for the number of remaining days, it added.
In 2015, the government launched the GMS with the objective of mobilizing the gold held by households and institutions in the country.
"The Medium Term Government Deposit (MTGD) can be made for 5-7 years and Long-Term Government Deposit (LTGD) for 12-15 years or for such time as may be chosen by the Central Government from time to time. Deposits can also be allowed for divided intervals (e.g. 5 years 7 months; 13 years 4 months 15 days; etc.)," it said.
The scheme enables banks' customers to save their idle gold holdings for a fixed time in recovery for the interest in the range of 2.25 percent to 2.50 percent.
In the case of MLTGD, it said, the retrieval of principal at maturity should, at the option of the depositor, be either in rupee equivalent of the value of deposited gold at the time of redemption or in gold.
"However, any pre-mature redemption of MLTGD shall be only in INR. Where the retrieval of the deposit is in gold, an administrative charge at a rate of 0.2 percent of the notional redemption amount in terms of INR shall be collected from the depositor," it said.
The interest increased on MLTGD will be computed with reference to the value of gold in terms of rupees at the time of deposit and will be paid only in cash, it said.