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GOLD
Gold is the most useful metal in jewelry. Rings, bracelets,
necklaces, earrings, and many other jewelry items are fashioned
from Gold, and Gold is the main precious metal used for jewelry
settings. Gold masks and ornaments were used by many ancient
civilizations, and Gold has also been used in coinage since the
earliest of days. Pure Gold lacks resistance to pressure and
easily
bends.
For
this
reason,
Gold
jewelry
is
even
by
minor
touches.
in the Gold. The main metals alloyed with Gold are copper,
silver, palladium, nickel, zinc, and iron. White Gold, which has
become very popular in jewelry, is mainly alloyed with nickel
and zinc, and occasionally palladium. White Gold resembles the
color of Silver, but it is far more resistant to corrosion and will
not tarnish like Silver. Rose Gold, which has a slightly reddish
tone, is alloyed mostly with copper. Green gold, which appears
greenish-yellow, is alloyed with silver, and Blue Gold, which is
gold with a whitish-blue tone, is alloyed with iron.
India's Golden Tradition
Gold is part and parcel of India's culture and tradition. As
money, jewelry, status symbol and investment, gold has played a
crucial role in the lives of Indians for centuries. A family's
wealth was determined on the quantity of gold and land they
had. Gold is considered Lakshmi (the Hindu goddess of wealth)
and a symbol of prosperity.
Traditionally and, as a religious practice, an Indian woman
wears ornaments throughout her life. Gold is her metal of choice
for jewelry. Usually, from childhood till the end of her life, the
HISTORY
Gold monetisation was first rolled out by then finance minister Morarji
Desai in 1962. Gold bonds, as they were called, were opened for
subscription between November 12, 1962 and February 28, 1963 for a
15-year tenure. 16 tonnes of gold worth Rs 8.61 crores was mobilised.
Morarji Desai admitted it "did not come up to expectations". In 1965,
another gold monetisation scheme (called the gold bond scheme again)
was launched offering tax immunity for people who hadn't declared their
gold holdings earlier.
But that optimism proved misplaced and the scheme too failed to
mobilise a significant amount of gold. The third attempt at gold
monetisation - the National Defence Gold Bonds scheme of 1980 - was
again a relative failure, managing to raise only 13 tonnes. In 1993, the
Narasimha Rao government with Manmohan Singh as Finance Minister
had another go at gold monetisation. The gold bond scheme was
launched by issuing the Gold Bonds (Immunities and Exemptions)
Ordinance in March 1993. The scheme, which asked no questions about
the origins of the gold, ran for three months from March 15, 1993.
Investors, who wished to avail the scheme, were expected to deposit a
minimum of 500 grams of gold to be melted later. There was no
maximum limit for subscription.
In 1999, the government once again launched a gold deposit scheme,
this time open-ended, which depositors could avail by depositing a
minimum of 500 grams of gold like in 1993. There was again no
maximum limit. There was, however, no amnesty clause as the
government had furnished an undertaking in 1997 to the Supreme Court
that they would offer no such amnesty in the future. The scheme has
managed to collect "15 tonnes of gold to date
2. Those banks that do have GDS, set the minimum deposit amount at
anywhere between 500g to 1kg of gold, making the Scheme more
suitable for temples than individuals.
3. The product is not widely marketed.
4. Banks cannot easily assay the gold to decipher its caratage and purity.
As interest on the GDS is typically paid in grams of gold, banks cannot
offer the product unless they can quickly ascertain its quality.
5. Banks do not accept jewellery under the GDS, assuming that
customers will not want to deposit jewellery and receive plain gold when
their investment matures.
Most Indians not being keen on melting family heirlooms and gold
jewellery they hold dear has also been cited by experts as the reason for
the failure of these schemes.
Besides this, you also get the interest on your gold. The interest
is also in the form of gold. At the time of maturity, your gold
itself gets heavier because of regular gold interest. You can
redeem your gold in the form of cash or gold. The gold kept
with the bank is used for the gold lending.
Gold lying in the locker appreciates in value if gold price
goes up but it doesn't pay you a regular interest or dividend. On
the contrary, you incur carrying costs on it (bank locker
charges). The monetisation scheme will allow you to earn some
regular interest on your gold and save you carrying costs as well.
It is a gold savings account which will earn interest for the gold
that you deposit in it. Your gold can be deposited in any physical
form jewellery, coins or bars. This gold will then earn interest
based on gold weight and also the appreciation of the metal
value. You get back your gold in the equivalent of 995 fineness
gold or Indian rupees as you desire (the option to be exercised at
the time of deposit).
Objective
The objectives of the Gold Monetization scheme are:
Deposit of Gold:When the results of the fire assay are told to the
customer, he has a choice of either refusing to accept, in which case he
can take back the melted gold in the form of gold bars, after paying a
nominal fee1to that centre; or he may agree to deposit his gold (in which
case the fee will be paid by the bank). If the customer agrees to deposit
the gold, then he will be given a certificate by the collection centre
certifying the amount and purity of the deposited gold.
Conditions:The minimum quantity of gold that a customer can bring is
proposed to be set at 30 grams, so that even small depositors are
encouraged. Gold can be in any form(bullion or jewellery).
II. Opening of Gold Savings Account with the banks.
Gold Savings Account:When the customer produces the certificate of
gold deposited at the Purity Testing Centre, the bank will in turn open a
Gold Savings Account for the customer and credit the quantity of
gold into the customers account. Simultaneously, the Purity Verification
Centre will also inform the bank about the deposit made.
Interest payment by banks:The bank will commit to paying an interest
to the customer which will be payable after 30/60 days of opening of the
Gold Savings Account. The amount of interest rate to be given is
proposed to be left to the banks to decide. Both principal and interest to
be paid to the depositors of gold, will be valued in gold. For example if
a customer deposits 100 gms of gold and gets 1 per cent interest, then,
on maturity he has a credit of 101 gms.
Redemption: The customer will have the option of redemption either in
cash or in gold, which will have to be exercised in the beginning itself
(that is, at the time of making the deposit).
Tenure: The tenure of the deposit will be minimum 1 year and with a
roll out in multiples of one year. Like a fixed deposit, breaking of lock-in
period will be allowed.
Tax Exemption:In the Gold Deposit Scheme (1999), the customers
received exemption from Capital Gains Tax, Wealth tax and Income Tax.
Similar tax exemptions are likely to be made available to the customers
in the GMS after due examination.
III. Transfer of Gold to the Refiners
Refineries: At present there are about 32 refineries in the country. The
laboratories of some of these refineries are NABL accredited which
means that the process that they adopt is certified.BIS has been asked by
this Department to ascertain if it can conduct accreditation of the
products being produced in these refineries also.
Transfer of gold to refineries: Purity Testing Centres will send the gold
to the refiners. The refiners will keep the gold in their ware-houses,
unless the banks prefer to hold it themselves.
TENURE
SHORT TERM GOLD MONETIZATION SCHEME
In the short term Gold Monetization Scheme, you deposit the gold for 13 years. The interest rate of this type of scheme is decided by the bank.
You can get back the deposit in the form of gold or rupee. The deposit
period can be extended multiple times in the blocks of one year.
Tax Benefit
There is no tax at all. The investment, interest and maturity is
tax-free. There is no capital gains tax on the gold interest.
There is wealth tax as well.
Benefit To Government
1. You have to part the gold for some years. You cant see it
physically till the maturity.
2. The gold jewelry will lose its form. The gold is melted in
the Gold Monetization Scheme.
3. The impurities can reduce the weight of your gold.
4. You have to go through the tedious process of Gold
Monetization Scheme.
So, boards have not shown much interest in the scheme, a senior
official
in
the
state
government
said.
Travancore Devaswom Board (TDB) President Prayar Gopalakrishnan,
who took charge of the office last month, said that he was yet to study
the details of the scheme.
The famous Lord Ayyappa Temple at Sabarimala, visited by millions
every year, is among the several shrines under TDB.
Cochin Devaswom Board (CDB) member E A Rajan said it does not
have surplus gold that could be deposited under the scheme.
Gold in the temples are used to attire the idols. They are in jewellery
form,
he
said.
The famous Sree Padmanabhaswamy Temples Executive Officer K N
Sateesh said all temple affairs were under the scrutiny of the Supreme
Court.
We cannot say anything on these matters now, he said while adding
that everything will depend on the court decision.
Guruvayour Devaswom, which manages the famous and one of the
riches temples Sree Krishna shrine at Guruvayour, said there was no
problem in participating in the scheme but they did not have any excess
gold to deposit at present.
There is no problem for us to deposit in the scheme, Mallessery
Parameswaran Namboothirpad, Member (Administrative) of the
Managing Committee, said.
Nearly 500 kg gold was already deposited under a scheme with State
Bank of India, he said, while adding that the temple receives an average
of three kg of gold every month.