Two New Schemes By RBI To Curb Gold Imports
BENGALURU: The Indian government has been trying to cut gold imports for a long time but now it’s trying to control the import of gold by initiating two new schemes called gold bonds and gold monetization scheme. This is also implemented towards the utilization of the present gold in the country, according to rediff.com.
Gold Monetization Scheme:
The Gold Monetization Scheme works very similar to that of a Bank Account. Here the customer periodically deposit money in his account and will receive interest from the bank. The bank uses these deposits to make loans to others and receives interest in return. The difference between the interest paid and received is the bank’s income. Similarly, under this scheme, households and jewelers will be able to place their gold holdings in a metal deposit with a bank.
The bank will also pay interest for this. This scheme also has some benefits; one of them is that it will reduce the dependence on imported gold as India, being the world’s largest consumer of gold still has to import about 97 percent of its annual gold demand which is a drain on its forex reserves and a key reason why the rupee value is falling.
Gold Bonds:
The Gold Bonds will work just like a regular coupon bearing bond that the government issues to borrow money for various purpose. The government receives money from investors, who invest in the bond, and pay a fixed periodic interest known as coupon on it. On maturity, it returns the money to the investors. Under this scheme, RBI will issue bonds in the denomination of 2 gms, 5 gms and 10 gms of gold.
The maximum annual limit for investment under this scheme is 500 gms each person. The bonds would be issued for a period of five to seven years and redemption value will be decided as per the prevailing market price of gold at the time of maturity. Investors will also receive interest payout every year. The benefit of this scheme is that it will remove the need to import gold for investment purposes.
At present, when people buy gold as an investment, it has to be imported from outside. This leads to an outflow of forex and increases India’s current account deficit – the amount India owes to the world in foreign currency.
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