Gold
Monetization: A golden opportunity!!
We Indians have a special place for gold in our hearts and bank lockers
too J . After all we are one
of the biggest consumers of gold in the world.
We are emotionally, fashionably, religiously and financially
attached to gold that we hold in form of ornaments, coins, gold bar etc. While it’s
understood that gold is a traditional investment tool and considered to be most
safe asset class, just hoarding gold in bank locker/home is not wise anymore as
it’s unproductive for us, for our national interest and for our economy too.
Indian government has launched the Gold Monetization scheme which aims to monetize the idle gold lying
with households, trusts and institutions and put it to productive use and giving the
depositor an opportunity to earn tax free interest and capital appreciation on their unused idle physical gold.
While announcing the Gold
monetization scheme in Budget 2015-16, Union Finance Minister Arun Jaitley
stated that –“stocks of gold in India were estimated to be over 20,000 tones
but mostly this gold was neither traded, nor monetized.”
Under the Gold Monetization scheme, investor holding the
physical gold owned in form of jewelry/coins/bars may deposit the same with the
government. Bank will conduct a purity test in case of gold ornaments; once
this is done the gold will be deposited in melted form.
The value of the gold rises along with the market prices. It
also starts earning interest. The interest is also in the form of gold.
This scheme gives an
opportunity to earn interest on idle gold that earns nothing when kept in home or Bank locker.
It’s advisable to deposit unused gold kept only as an asset.
There are three different deposit tenures available under the
scheme. At the time of maturity depositor can opt to take cash or get physical
gold of an equivalent amount. The rate for the valuation of gold, at the time of
the redemption, would be the prevailing market rate.
Let’s have a quick look at the key features of
this scheme:
And now let’s see how this scheme can benefit
you:
Individuals willing to avail benefit of Gold
monetization scheme can follow below mentioned steps:
The entire exercise will
be done in a transparent manner. After receiving the customer's consent for
melting the gold, Purity test will be conducted to know the quantity of pure
gold present. The depositor will also be informed of the net weight and gold
will be melted in front of the depositor.
Interest and Redemption under the
scheme:
|
|
Short Term
|
Medium Term
|
Long Term
|
|
Deposit Tenure
|
1-3 years
|
5-7 years
|
12-15 years
|
|
Interest Rate
|
To be decided by bank
|
Currently2.25% pa
|
Currently 2.50% pa
|
|
Redemption
|
Depositor can
opt for Gold or INR as per below two options:
v Redemption of principal and interest at
maturity in INR equivalent to deposited gold as per prevailing market rate.
v Redemption of principal and interest at
maturity in Gold.
|
Redemption of
principal in INR equivalent of value of deposited gold at the time of
redemption, or in gold.
v If depositor opts to redeem principal in form
of gold, 0.2% administrative charge has to be paid in cash
v The interest shall be calculated with
reference to the value of gold in terms of Indian Rupees at the time of
deposit and will be paid only in cash.
|
Redemption of
principal in INR equivalent of value of deposited gold at the time of
redemption, or in gold.
v If depositor opts to redeem principal in form
of gold, 0.2% administrative charge has to be paid in cash
v The interest shall be calculated with
reference to the value of gold in terms of Indian Rupees at the time of
deposit and will be paid only in cash.
|
The designated
banks may allow whole or part premature withdrawal of the deposit subject to
minimum lock-in period and penalties as applicable.
This scheme will
change the image of gold from being just a secure asset to a performing and
regular income generating asset. The Indian government has launched this scheme
with a hope to reduce gold imports in country.
Benefits Summary
for Investors if they move from physical idle gold to Government's Gold Monetizing
Scheme:
- · No risk and chance of impurity of gold
- · No cost to be incurred in payment of making charges
- · No cost to be incurred of high bank locker cost to be paid and its saving to investor
- · No risk, cost to be incurred and headache for security of gold
- · No bearing of any sort of discount deduction in % terms done by Jewelers in exchange of physical Gold
- · No Wealth Tax
- · Tax free Interest paid on Gold deposits
- · No Capital Gain tax on capital appreciation of Gold price
- · Loan against Gold Deposit is available
- · Premature full or partial withdrawal and redemption available with respective T&C and penalties
Please refer to the below link from finance ministry on Gold
Monetization scheme for further details:
Warm Regards,
Nidhi Srivastava
&
Manish Kr Pandey
www.fernwealth.com
#+91-9830040603
Email-fernwealthadvisors@gmail.com
No comments:
Post a Comment