India’s gold demand had reached pre-pandemic levels and has witnessed an annual growth of 14% during the July-September quarter of FY 2022-23 at 191.7 tonnes mainly driven by strong consumer interest.
According to a World Gold Council (WGC) report, in value terms, gold demand grew by 19% to Rs 85,010 crore during the third quarter of 2022, compared to Rs 71,630 crore in the same period of 2021.
The above data clearly shows India’s demand for physical gold. In order to discourage gold imports and to minimise the trade imbalance, the government has launched some schemes for the investors who want to earn returns through with gold.
Gold Monetisation Scheme (GMS), 2015
The objective of the scheme is to mobilise gold held by households and institutions of the country and facilitate its use for productive purposes, and in the long run, to reduce country’s reliance on the import of gold.
The Gold Monetisation Scheme comprises of the previous ‘Gold Deposit Scheme (GDS)’ and the ‘Gold Metal Loan’ scheme.
The amount of interest rate payable for deposits made for the short-term period is decided by the banks on the basis of the prevailing international lease rates, other costs, market conditions etc. and the same is borne by the banks.
For the medium and long-term deposits, the rate of interest is decided by the government, in consultation with the RBI from time to time and the same is borne by the central government.
Sovereign Gold Bond (SGB)
SGBs are government securities denominated in grams of gold. They are substitutes for holding physical gold. Investors have to pay the issue price in cash and the bonds will be redeemed in cash on maturity.
The bond is issued by Reserve Bank on behalf of Government of India.
Sovereign Gold Bond Scheme was launched in November 2015, under Gold Monetisation Scheme.
The quantity of gold for which the investor pays is protected, since the person receives the ongoing market price at the time of redemption/ premature redemption.
The SGB offers a superior alternative to holding gold in physical form. The risks and costs of storage are eliminated. Investors are assured of the market value of gold at the time of maturity and periodical interest.
SGB is free from issues like making charges and purity in the case of gold in jewellery form. The bonds are held in the books of the RBI or in demat form eliminating risk of loss of scrip etc..
Indian Gold Coin
The Indian gold coin is a part of the Gold Monetisation Programme. The coin is the first ever national gold coin minted in India and has the National Emblem of Ashok Chakra engraved on one side and Mahatma Gandhi on the other side.
The coins are available in denominations of 5, 10 and 20 grams. The Indian Gold coin and bullion is unique in many aspects and carries advanced anti-counterfeit features and tamper proof packaging. The Indian Gold coin and bullion is of 24 carat purity and all coins and bullion are hallmarked as per the BIS standards.
Gold Metal Loan Scheme
Gold Metal Loan Account: A Gold Metal Loan account, denominated in grams of gold, is opened by the bank for jewellers. The gold mobilised through the revamped GDS, under the short-term option, is provided to jewellers on loan, on the basis of the terms and conditions set-out by banks, under the guidance of RBI.
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