India is amongst the largest importers of gold in the world. Importing gold results in large amounts of foreign exchange leaving the country, which also puts pressure on the Indian rupee against the dollar.
The government in the Union Budget 2015-16 came out with a novel gold monetization scheme, which will make use of the gold lying in bank lockers, at houses and other religious places.
So, while you were earlier incurring an expense to hold your gold at bank lockers, now you will an income in the form of earn interest from it. Also, the worries of theft of precious gold is altogether eliminated.
Here is how you can monetize your gold?
Step 1: The very first step is to take your gold to one of the testing centres. It would then be tested for purity. There is a charge that would be applicable at the testing centres.
Step 2: Once your quantity is determined, you have to give your consent for melting of the gold. The centre would remove the stones and other precious items that are a part of the jewellery. Now, you would know the value of your gold and also its purity. If you do not agree to melt you can just leave.
Step 3: In case you agree you have to fill a form with your complete details, which is also known as the Know Your Customer form.
Step 4: The testing centre will than inform the bank on the quantity and all other relevant details of the gold.
Step 5: After this the bank will proceed to open a gold account. You would be paid interest on this account which is equivalent to gold. One is not sure at the present point in time what the interest rate would be. Even if it is 1-2 per cent, you stand to gain a marginal amount on idle gold.
Step 6: In case you are not happy with the gold monetization scheme or need gold for a function in the future you can convert the same back to gold bars and coins.
Should you opt for the gold monetization scheme?
If you have gold which you use at functions or during festivals it would be unwise to surrender the same. But many of us simply have too much gold that we do not use. This can be converted to the gold monetization scheme. This is because it would help you to gain some interest, is also liquid and you do not have to worry of theft and incurring bank locker charges.
It is also easy to track your gold under the scheme. At the moment one cannot say with some assurance what would be the interest rates and the charges that would be applicable for testing and melting. The finer details are yet awaited. The scheme is likely to see a full fledged launch sometime later this year.
One cannot say with certainty that the scheme would be successful given our craving for gold.