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The proposal has been submitted by the one of the department in the ministry said an official source without disclosing much details.
The scheme to be operated by post offices in rural areas besides select Public sector banks as authorised by the Reserve Bank of India (RBI), involves primarily a fixed deposit account with varying periodicity as offered by banks today but with one exception. The balance will be maintained in terms of gold units (in grams) and not in cash by converting the amount deposited in the account into gold units based on bank’s gold selling rate of the bank. This rate will be fixed by the bank as per market rate like prevailing buying and selling rates of foreign exchange. Gold deposit receipts will be given to the public to feel the holding of gold without the risk of theft or cost of storage. On maturity , account holder can opt for either gold ( actual physical quantity held or its money equivalent calculated at the rate of bank gold buying rate of the day.
Further the scheme proposes to give the account holder the option of converting the deposit into cash fixed term deposit at the rate of interest specified at the time of deposit. Differential higher interest rate can be offered to women or under daughter’s marriage scheme with more than ten years maturity, as per the proposal. On maturity, either capital gains tax (in case of deposit being converted into physical gold) or income tax (in case of cash holdings) can be deducted while loan or mortgage or gift facility can be extended for part of whole of the gold held in balance.
In order to make the scheme commercially viable, the government or Reserve Bank of India may offer incentives like permitting banks to import part of their gold deposit facility, waiving or lowering SLR/CRR requirements on such deposits, insurance to insulate banks from excessive price escalation etc. Statutory Liquidity Ratio (SLR) and Cash Reserve Ratio (CRR) are reserve requirements maintained by banks with RBI to prove accountability on holding public deposits. In case of default the reserves could be used to pay back the public.
Explaining the scheme, official sources said the basic difference between this scheme and gold deposit scheme offered by the banks at present is that this scheme encourages virtual holding of gold by a depositor and thus reduces the physical demand. Gold deposit scheme, as offered by banks at present, on the other hand fuel further demand for gold as the banks are offering additional interest on the gold holding and in fact incentivising holding of gold by public in banks.
The report suggesting this proposal is of the view that in spite of rising gold prices, gold demand in India has been rising. Average gold price in 2012 was 2.4 times that of 2008 and yet the demand has gone up by 1.6 times during the corresponding period.
Since 2008 when the tariff on hold was Rs 100 per 10 gm, it has been raised three fold to Rs 300 per kg in 2012 and after that there has been three fold increase in import duty from two per cent to six per cent in January 2013. According to officials, gold through the smuggling route has been consistently going up from Rs 7.42 crore in 2011-12 to Rs 60 crore in 2012-13 till date and still rising.
Import of gold has been a major component of the fiscal deficit along with oil. The deficit during April-December period is almost 79 percent of the budgetary estimate of Rs.5.14 lakh crore for the entire financial year ending March 31, 2013. India’s gold imports, next only to oil imports in terms of value, were responsible for a current account deficit of 4.2% of the gross domestic product in 2011-12, a 30-year high. On 22 January, India raised the import duty on gold to 6% from 4%.India is the world's largest importer of gold and biggest consumer of gold jewellery.
