Gold Monetization Scheme

Introduction

Gold is not just any other metal, this has become an integral part of any household and a special tool of the present socio-economic condition. In the year 2016, the government of India decided to start the new Gold monetization Scheme to reduce the import of gold. Usually the people of India like gold ornaments. Even some big religious institution has a huge collection of gold.

Details

The central government has to keep the gold reserve to print currencies or to buy resources for the country. Previously India used to import a lot of gold every year to buy essential commodities like oil and gas. The gold reserve is also important to print currencies.

• Gold is not only a favorite ornament material of Indian women, it is also a very good asset. It is a very smart way of investment, as the price of gold is increasing constantly. Gold is a favorite choice for investors, as it provides good opportunity to maximize the wealth.
• The government’s monetary policy also includes gold. The Reserve Bank of Inda keeps certain amount of gold as security deposit.
• As per this scheme people can invest their gold for a long time of period. They will visit the bank to open their gold account. People will get interest of 2.25% on their gold investment. After the maturity of the gold, people will get their interest in money or gold.
• Gold is a major part of the Indian economy. According to some statistics, the gold industry in India has more than 2 million people. Gold industry in India is $30 billion industry and it works as a major economic booster. According to a recent data, India imports Gold of $18 billion every year.
• Keeping gold is considered risky. If you keep your gold in the locker it will not give you any benefit. But with the help of this scheme people can gain profit without losing their valuable asset.

Objective Of This scheme:

The main objective of this scheme is to curb the import of Gold by India. Every year Indian government spend billions of dollar to import gold from other countries. A major part of the gold of this country lies in the locker and thus it plays no role in the economy. By implementing this scheme common people can mobilize their asset and they can earn some money by investing their gold.

Thus the government will be able to keep its necessary gold reserve without importing gold from other countries.  Gold is considered as an important part of every household in India. People also donate gold to the religious institutions as well and the government is trying to inject these gold to boost the economy of the country.

Benefits Of This Scheme:

Booth people and economy of this country will get benefit from this scheme.

• By keeping the gold in lockers people don’t get any return on their investment. But investing gold in this scheme will help those people to earn money for that specific time period.
• India will be able to maintain its gold reserve. The gold reserve is very important to print currencies.
• The government of India can reduce the cost of importing gold from other countries.
• Inflation can be controlled through this scheme and price of essential commodities will decrease.
• The value of Indian currency will increase, with the increasing gold reserve in the country.

Terms and Conditions Of This Scheme:

Through this scheme, Gold will be treated as normal currency. This scheme has various terms and conditions like:

1. The minimum amount of gold deposit is 30 grams and there is no upper limit.
2. People and institutions have to go to the RBI listed banks to deposit their golds.
3. To open a gold account they have to follow the same process of opening a zero balance account.
4. The interest rate is fixed to 2.5% and people have to deposit their gold for minimum 2 years.
5. If anyone wants to take their gold before the maturity period, they have to pay the penalty.
6. After the maturity period, the interest on the gold will be paid to the clients through money or gold.
7. The government has released this scheme to certain areas, because of the lack of infrastructure.

Contact Details:

To know more about the scheme you have to contact your nearest RBI listed bank. According to the Government data, Indian houses and various institutions have more than 20 thousands tonnes of gold reserve. This scheme was initiated to mobilize all these gold to curb the import of gold. Importing gold from other countries increase the price of gold automatically. The government is going to implement this scheme through the banks.

Conclusion

Right now the government doesn’t have enough infrastructure to implement this scheme. To handle the secure transaction with gold, properly trained and skilled persons are required. The main problem is the mindset of the common people. common people spend a lot of money on the making charges of their gold jewelry and they will not like to melt their costly jewelry. The interest rate of this scheme is too low.

Only 2.5% interest rate will not be able to attract the common population. Because of this scheme golds will come under the tax system. Most of the gold is held by religious institutions, which don’t fall under the tax system. If these institutions use their gold to gain the interest, they have to pay the tax.