PM to launch Gold Related Schemes on 5th November, 2015;
First ever National Gold Coin minted in India with National Emblem of
Ashok Chakra engraved to be released among others on the occasion
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.
PIB
