Gold monetisation scheme: Centre tweaks its rules, says deposits can be repaid in the precious metal
The government announced the change for medium- and long-term deposits, in an effort to make the plan more attractive to the country's gold-rich temples.
The government on Friday made adjustments to its gold monetisation scheme to make it more appealing to the country’s temples, which own massive amounts of the precious metal. Now, medium- and long-term deposits can be repaid in gold, rather than only in cash as it was before, Reuters reported. However, the cash option remains as well.
Gold is a common means for believers to make donations to temples in India, and the government has been looking for ways to monetise idle assets in the country.
The RBI added that the interest will be paid in cash only and a fee of 0.2% will be levied, based on the value of gold at the time of redemption. The move comes after a request from the gold-rich Sri Venkateshwara Swamy Temple, popularly known as Tirupati, in Andhra Pradesh. The temple, which holds more than 7 tonnes of the metal, worth hundreds of crores of rupees, had asked that deposits that were longer than three years be repaid in gold rather than in cash.
In November last year, Prime Minister Narendra Modi had announced the government’s new gold monetisation scheme. Modi urged Indians to deposit their gold in banks, offering rates of interest that earlier schemes lacked, and even launched gold-backed bonds in an effort to create value from the vast gold reserves lying unused in the country. However, both temples and individuals have traditionally been wary of parting with their gold as it holds religious and cultural value, in addition to being a financial asset.
An earlier version of this report erroneously reproduced the text directly from a Reuters despatch.