The gold monetisation scheme announced by Finance Minister Arun Jaitley in the Budget will be a game-changer in a country that has huge reserves of the metal, said Rajesh Khosla, Managing Director of MMTC-PAMP.

The company is currently the only LBMA (London Bullion Market Association) accredited gold refiner in the country.

The earlier scheme of 1998-99, he said, had been a non-starter as it required a minimum of 500 gm of gold to be deposited, and mainly addressed temple trusts.

“India’s gold holdings are estimated to be around 25,000 tonnes, and over 90 per cent of this is with households,” said Khosla.

While the earlier scheme had managed to mop up 18-20 tonnes of gold in 15 years, the gold monetisation scheme 2.0, which also covers retail buyers, can garner 100 tonnes in calendar year 2016.

“This will have a huge impact on gold imports,” he said. Elaborating on their worldwide experience, Somasundaram PR, Managing Director-India, World Gold Council, said that monetisation has been very successful in Turkey, which has similar “under the pillow” stocks of gold.

Ideal rate

“There are many products available in Turkey, like current accounts, deposit accounts and savings accounts,” Somasundaram said, adding that in China, gold savings accounts were very popular.

The prevalent rate is 1 per cent per annum, payable in gold at the end of the prescribed term.

Saurabh Gadgil, Managing Director of Pune-based PN Gadgil Jewellers, said that the scheme to mobilise idle gold and bring it into the system was a win-win situation for all stakeholders.

According to him, an interest rate of 3-4 per cent a year would attract depositors.

While details of the scheme are awaited, issues such as building the eco-system to verify the purity of gold and whether the deposits will be taxable needed clarification.

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