Cornered by the Government’s move to curb gold imports, the bullion industry is set to undertake an initiative that could see one of the largest drives in the country to mop up gold coins and bars idling with individuals, trusts and, even, temples.

To be called the ‘Swarna Bachao Abhiyaan’ (Save Gold Campaign), the drive could get off ground in a few weeks' time.

“The Government wants us to start in the next couple of weeks. We are looking into all aspects before starting it,” said Vinod Hayagriv, former Chairman of the All-India Gems and Jewellery Trade Federation.

The plan is to attract primarily those who have invested in gold coins and bars to lend it to a non-banking financial company (NBFC) that will be set up for the purpose. Investors can deposit their holdings to retail jewellers, who in turn will hand it over the authorised NBFC. The gold can be loaned out for three to seven years, though there will be provisions to withdraw it before maturity.

The NBFC, in turn, will lend the gold to jewellers for replacement later at a mutually specified time.

Save forex

“Even jewels can be loaned out but we won’t be taking traditional ones since they are treasured. Jewellers will determine which jewel can be taken for melting into gold bars but there will be other due diligences carried out by way of assaying,” he told the India International Gold Convention here.

Anyone wanting to loan their bars or coins will have to offer a minimum of 100 g, while in the case of institutions it would be 1 kg. “Investors could get 2.5-3 per cent interest a year, while the jeweller will get half a per cent,” Hyagriv said.

Jewellers could take gold as loan at 6-7 per cent interest from the NBFC, which would be finally left with a margin of 2 per cent.

The fund hopes to save foreign exchange outgo to the tune of $30 billion to $60 billion in one to three years’ time by attracting the idling gold. “We hope to attract 50 to 100 tonnes of gold in quick time,” he said.

The lent gold’s value will reflect the market price. Those lending will be getting an additional margin by way of the interest.

When a person offers gold under the scheme, he/she will be given a certificate that can be traded anywhere or even transferred across the country. All transactions will be transparent on the Web that will be secured through passwords and other security.

The trade body is still to decide who will run the NBFC, though it has three or four organisations in mind.

Huge initiative

As regards security for the deposits, the federation is planning to insure the deposits. “We can’t go for bank guarantees since we are working on small margins,” he said.

According to Hyagriv, about three lakh jewellers in the country will be involved in the drive to attract the idling gold.

Industry sources said that the trade body decided to actsince the Government did not come forward for a joint initiative.

“We are in touch with the Finance Ministry. There may be some concessions in the form of tax exemptions but it has made clear that there will be no amnesty for surrendering unaccounted gold,” said Hyagriv.

The federation is also trying to rope in as many partners as possible. “We are trying to get on board NBFCs, refiners, importers…” he said.

However, doubts are being raised whether the fund could realise its objective . A poll conducted at the convention showed that 70 per cent of the participants were sceptical if it would attract investors.

Pradeep Nair, a participant, told the meeting that people in the South would not be willing to part with their jewellery for such schemes.

A few other participants said that the interest rate was too low to attract the idling gold, but Hyagriv said that a survey revealed that jewellers are upbeat over the proposal.

>subramani.mancombu@thehindu.co.in

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