The Prime Minister Shri Narendra Modi will
launch the three Gold related Schemes i.e. Gold Monetisation Scheme (GMS), Gold
Sovereign Bond Scheme and the Gold Coin and Bullion Scheme on Thursday, 5th
November, 2015 in the national capital.
The salient features of each of the
aforesaid scheme are as follows:
Gold Monetisation Scheme (GMS),
2015
The GMS will replace the existing Gold
Deposit Scheme, 1999. However, the deposits outstanding under the Gold Deposit
Scheme will be allowed to run till maturity unless the depositors prematurely
withdraw them.
Resident Indians (Individuals, HUF,
Trusts including Mutual Funds/Exchange Traded Funds registered under SEBI
(Mutual Fund) Regulations and Companies) can make deposits under the scheme.
The minimum deposit at any one time shall be raw gold (bars, coins, jewellery
excluding stones and other metals) equivalent to 30 grams of gold. There is no
maximum limit for deposit under the scheme.
The gold will be accepted at the
Collection and Purity Testing Centres (CPTC) certified by Bureau of Indian
Standards (BIS). The deposit certificates will be issued by banks in equivalent
of 995 fineness of gold. The designated banks will accept gold deposits under
the Short Term (1-3 years) Bank Deposit (STBD) as well as Medium (5-7 years)
and Long (12-15 years) Term Government Deposit Schemes (MLTGD). While the
former will be accepted by banks on their own account, the latter will be on
behalf of the Government of India. There will be provision for premature
withdrawal subject to a minimum lock-in period and penalty to be determined by
individual banks for the STBD. The interest rate in the STBD will be
determined by the banks. The interest rate in the medium term bonds has been
fixed at 2.25% and for the long term bonds is 2.5% for the bonds issued in
2015-16.
Interest on deposits under the scheme
will start accruing from the date of conversion of gold deposited into tradable
gold bars after refinement or 30 days after the receipt of gold at the CPTC or
the bank’s designated branch, as the case may be and whichever is earlier.
During the period from the date of receipt of gold by the CPTC or the
designated branch, as the case may be, to the date on which interest starts accruing
in the deposit, the gold accepted by the CPTC or the designated branch of the
bank shall be treated as an item in safe custody held by the designated bank.
The Short Term Bank Deposits will
attract applicable Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR).
However, the stock of gold held by the banks will count towards the general SLR
requirement. The opening of Gold Deposit Accounts will be subject to the same
rules with regard to customer identification (KYC) as are applicable to any
other deposit account.
The designated banks may sell or lend
the gold accepted under STBD to MMTC for minting India Gold Coins (IGC) and to
jewellers, or sell it to other designated banks participating in GMS. The gold
deposited under MLTGD will be auctioned by MMTC or any other agency authorised
by the Central Government and the sale proceeds credited to the Central
Government’s account with the Reserve Bank of India. The entities participating
in the auction may include the Reserve Bank, MMTC, banks and any other entities
notified by the Central Government. Banks may utilise the gold purchased in the
auction for purposes indicated above. Designated banks should put in place a
suitable risk management mechanism, including appropriate limits, to manage the
risk arising from gold price movements in respect of their net exposure to
gold. For this purpose, they have been allowed to access the international
exchanges, London Bullion Market Association or make use of over-the-counter contracts
to hedge exposures to bullion prices subject to the guidelines issued by the
Reserve Bank.
Complaints against designated banks
regarding any discrepancy in issuance of receipts and deposit certificates,
redemption of deposits, payment of interest will be handled first by the bank’s
grievance redress process and then by the Reserve Bank’s Banking Ombudsman.
It may be recalled that the Government
of India announced the Gold Monetisation Scheme vide its Office Memorandum
F.No.20/6/2015-FT dated September 15, 2015. The objective of the Scheme is to
mobilise gold held by households and institutions of the country and facilitate
its use for productive purposes, and in the long run, to reduce country’s
reliance on the import of gold..
The list of CPTCs and Refiners are
certified by the Bureau of Indian Standards. Indian Banks Association has
finalized the necessary documentation including the tripartite agreements between
the designated banks, CPTCs and the Refiners under the Scheme. Banks have put in
place the requisite systems and procedures to implement the scheme and will
continue to improve them.
Sovereign Gold Bond Scheme
The Government of India has decided to
issue Sovereign Gold Bonds. The Bonds will be issued in multiple tranches
subject to the overall borrowing limits of GOI. Applications for the bond under
the first tranche will be accepted from November 05, 2015 to November 20, 2015.
The Bonds will be issued on November 26, 2015. The Bonds will be sold through
banks and designated post offices as notified. It may be recalled that the
Union Finance Minister had announced in Union Budget 2015-16 about developing a
financial asset, Sovereign Gold Bond, as an alternative to purchasing metal
gold.
Sovereign Gold Bond will be issued by
Reserve Bank India on behalf of the Government of India. The Bonds will be
restricted for sale to resident Indian entities including individuals, HUFs,
trusts, Universities, charitable institutions. The Bonds will be denominated in
multiples of gram(s) of gold with a basic unit of 1 gram. The tenor of the Bond
will be for a period of 8 years with exit option from 5th year to be exercised
on the interest payment dates. Minimum permissible investment will be 2 units
(i.e. 2 grams of gold).The maximum amount subscribed by an entity will not be
more than 500 grams per person per fiscal year (April-March). A
self-declaration to this effect will be obtained. A mechanism will be put in
place for internal verification of the self declarations.
In case of joint holding, the investment
limit of 500 grams will be applied to the first applicant only. Each tranche
will be kept open for a period to be notified. The issuance date will also be
specified in the notification. Price of Bond will be fixed in Indian Rupees on
the basis of the previous week’s (Monday–Friday) simple average of closing
price of gold of 999 purity published by the India Bullion and Jewellers
Association Ltd. (IBJA).Payment for the Bonds will be through electronic funds
transfer/cash payment/ cheque/ demand draft. The investors will be issued a
Stock/Holding Certificate.
The Bonds are eligible for conversion
into demat form. The redemption price will be in Indian Rupees based on
previous week’s (Monday-Friday) simple average of closing price of gold of 999
purity published by IBJA. Bonds will be sold through banks and designated Post
Offices, as notified, either directly or through agents. The investors will get
interest at a fixed rate of 2.75 per cent per annum payable semi-annually on
the initial value of investment for the bonds issued in 2015-16.
Bonds can be used as collateral for
loans. The loan-to-value (LTV) ratio is to be set equal to ordinary gold loan
mandated by the Reserve Bank from time to time. Know-your-customer (KYC) norms
will be the same as that for purchase of physical gold. KYC documents such as
Voter ID, Aadhaar Card/PAN or TAN /Passport will be required. The interest on
Gold Bonds shall be taxable as per the provision of Income Tax Act, 1961 (43 of
1961) and the capital gains tax shall also remain same as in the case of
physical gold. Department of Revenue has agreed to ensure tax neutrality
between the purchase of physical gold and investment in the gold bonds. This
will require amendments in the existing provisions of the Income Tax act ,
which will be considered in the 2016-17 Budget. Bonds will be tradable on
exchanges/NDS-OM from a date to be notified by RBI..The Bonds will be eligible
for Statutory Liquidity Ratio (SLR). Commission for distribution shall be paid
at the rate of 1% of the subscription amount.
Gold Coin/Bullion Scheme
The Indian gold coin & bullion is a
part of the Gold Monetisation Programme. The coin will be the first ever
national gold coin minted in India and will have the National Emblem of Ashok Chakra
engraved on one side and Mahatma Gandhi on the other side . Initially the
coins will be available in denominations of 5 and 10 grams. A 20 gram bullion
will also be available. Initially, 15,000 coins of 5gm, 20,000 coins of 10 gm
and 3,750 of bullions of 20 gm will be made available through MMTC outlets. The
Indian Gold coin & bullion is unique in many aspects and will carry advanced
anti-counterfeit features and tamper proof packaging.
The Indian Cold coin & bullion will
be of 24 karat purity and 999 fineness. All coins & bullion will be
hallmarked as per the BIS standards. These coins will be distributed initially
through designated & recognised MMTC outlets and later through specified
bank branches and post offices.
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DSM/MAM/KA