The Finance Ministry today said government will pay banks a 2.5 per cent commission for mobilising gold under the gold monetisation scheme and depositors will be permitted premature withdrawal of the deposited metal.
"It is expected that the above modifications will make the scheme more attractive for potential depositors," the Finance Ministry said in a statement spelling out the revised guidelines. Under the modified rules, government will pay the participating banks a fees for their services -- gold purity testing charges, refining, storage and transportation charges, among others -- on medium and long term gold deposits.
"Effectively, the banks would be getting a 2.5 per cent commission for the scheme which will include the charges payable to the collection and purity testing Centres/Refiners," the statement said.
The monetisation scheme encourages individuals, households and temples to deposit gold jewellery or bars with banks or collection agents.
The gold deposited would be later refined for domestic purpose and would help cut dependence on imports. The government has already mobilised 900 kgs of gold in over two-and-a-half months time through the scheme.
Depositors will earn up to 2.50 per cent interest per annum, a rate lower than savings bank deposits. Under the modified rules, premature redemption under medium and long term government deposits have been permitted.
"Any Medium Term Deposit will be allowed to be withdrawn after 3 years and any Long Term Deposit after 5 years.
These will be subject to a reduction in the interest payable," the statement added. The scheme, launched by Prime Minister Narendra Modi on November 5, provides for tax exemptions on interest earned on the gold deposited and exemption from capital gains made through trading or at redemption, it said.
Further, gold depositors can now give their gold directly to the refiner rather than only through the Collection and Purity Testing Centres (CPTCs). "This will encourage the bulk depositors, including institutions, to participate in the scheme," it added.
To make the scheme more attractive, Bureau of Indian Standards (BIS) has modified the licensing condition for refiners from the existing three years of refining experience to one year. "BIS has published an Expression of Interest (EOI) on its website inviting applications from the more than 13,000 licensed jewellers to act as a CPTC in the scheme, provided they have tie-up with BIS licensed refiners," the statement added.
India imports about 1,000 tonnes of gold every year and the precious metal is the second-highest component of the imports bill after crude oil. An estimated 20,000 tonnes of gold are lying with households and temples.
During April-December this fiscal, gold imports increased to USD 26.45 billion as against USD 25.85 billion in the same period last year.