New Delhi: Prime Minister Narendra Modi launched three gold related scheme including, first ever 'India gold coin' bearing Ashok Chakra, gold monetisation and gold bond schemes on Thursday.
Here is all you need to know about these three schemes.
Gold Bond Scheme
* Gold bond provide an alternate to buying physical gold.
* Know-your-customer (KYC) norms will be the same as that for purchase of physical gold. KYC documents such as Voter ID, Aadhaar Card/PAN or TAN /Passport will be required.
* Applications for the bond will be accepted from November 5-20 .The bonds will be sold through banks and designated post offices and will be issued on November 26 .
* It will offer investors an interest rate of 2.75 per cent and a choice to buy bonds worth 2 grams of gold, up to a maximum of 500 grams.
* These bonds will be issued in denominations of 5, 10, 50 and 100 grams of gold or other denominations.
* Investors can also use the bonds as collateral for loan and sell it before its maturity since they would be listed and tradable on the exchanges.
* The loan-to-value (LTV) ratio is to be set equal to ordinary gold loan mandated by the RBI from time to time.
* The tenor of the bond will be for a period of eight years with exit option from 5th year to be exercised on the interest payment dates.
* The issue price of the sovereign gold bond for this tranche has been fixed at Rs 2,684 per gram of gold, however, the current rate of gold is lower than the issue price and therefore make investors think about overpaying.
* The interest earned on gold bonds would be taxable per the provision of Income Tax Act, 1961 (43 of 1961), and capital gains tax shall be levied as in case of physical gold.
* The bonds can be bought by resident Indian entities including individuals, Hindu Undivided Families, trusts, universities and charitable institutions.
* Though the scheme looks lucrative but experts say one must stick to the asset allocation and not stretch beyond 10 per cent of the asset allocation into the metal.
Gold Monetisation Scheme
* The government had in September cleared the gold monetisation scheme aimed at tapping part of an estimated 20,000 tonnes of idle gold worth about Rs 5,40,000 crore into the banking system.
* The GMS will replace the existing Gold Deposit Scheme, 1999.
* Participating entities can earn up to 2.50 per cent interest rate on their idle gold.
* If a person wants to buy Rs 1,00,000 of gold, he goes to a bank and gets a piece of paper acknowledging the bank/government owes him 37 grams of gold; an interest is paid on this and, at the time of maturity, the individual gets back the gold (plus the interest that accrues of this) either in physical form or as cash.
* The depositor has to take the gold to the hallmarking centre where it will undergo purity test( percentage of gold). The gold then will pass through a fire assay test where it will be melted.
* Customers who agree to deposit the gold are not required to pay any fee and are provided with certificates by the collection centre.
* The bank will open a gold savings account and the customer's account will be credited with an equal quantity of gold.
* Interest rate on Medium and Long Term Government Deposit (MLTGD) are 2.25 per cent and 2.20 per cent, respectively.
* The designated banks would accept deposit under MLTGD category on behalf of the central government.
* The tenor of short term would be 1-3 years, medium term would be between 5-7 years and long term would for 12-15 years tenure.
* The receipts issued by the Collection and Purity Testing Centre (CPTC) and the deposit certificate issued by the designated banks shall state this clearly.
* The principal and interest of the deposit under the scheme will be denominated in gold.
* The gold received under MLTGD will be auctioned by the agencies notified by the government and the sale proceeds will be credited to government's account held with Reserve Bank of India.
* There will be provision for premature withdrawal subject to a minimum lock-in period and penalty to be determined by individual banks.
* RBI will maintain the Gold Deposit Accounts denominated in gold in the name of the designated banks that will in turn hold sub-accounts of individual depositors.
* Experts say that the biggest hurdle for the scheme is that Indians who buy gold in the form of jewellery are not very willing to part with it since it will be melted.
Gold Coins
* The coin is the first ever national gold coin minted in India with the national emblem of Ashok Chakra engraved to be released among others on the occasion.
* The coins will be available in denominations of 5 and 10 grams. A 20 gram bar or bullion will also be available.
* About 15,000 coins of 5 gm, 20,000 coins of 10 gm and 3,750 gold bullions will be made available through MMTC (Metals and Minerals Trading Corporation of India) outlets.
* The Indian Gold coin is unique in many aspects and will carry advanced anti-counterfeit features and tamper proof packaging that will aid easy recycling.
* These coins will be distributed through designated and recognised MMTC outlets.
