By Paul Ploumis 10 Sep 2015 Last updated at 08:31:14 GMT
NEW DELHI (Scrap Monster): Gold market experts and industry participants welcomed Indian government for giving final nod to the long-awaited gold schemes. The Indian Bullion & Jewellers Association (IBJA) termed the government move as a positive step in the right direction, but noted that the government also needs to address certain issues in connection with successful implementation of the schemes. It must be noted that the Indian Cabinet yesterday had given final approval for Sovereign Gold Bond and Gold Monetization schemes.
According to Saurabh Gadgil, Vice president, IBJA, banks are not entitled to accept gold jewellery. As banks are allowed to accept gold only in the form of coins and bars, the scheme will involve significant amount of melting if gold jewellery. Firstly, most citizens being emotionally attached to their gold jewellery, may find it difficult to give them for melting purpose. Secondly, the country lacks adequate number of BIS-accredited facilities to melt gold received from customers.
The proposed monetization scheme requires customers to fulfill the normal know-your-customer (KYC) guidelines in order to ensure supply of legitimate gold into the system. However, as most gold in Indian households are handed down from one generation to next, it will be extremely difficult to comply with KYC norms. In order to ensure participation of households, industry experts suggest scrapping of KYC norm requirement on gold deposits up to 500 grams.
The newly approved gold monetization scheme aims to mobilize hundreds of tonnes of yellow metal stashed in Indian households and temple vaults. Further, it aims to lessen country’s foreign exchange outflows by cutting down gold imports into the country. In longer term, gold monetization scheme is expected to reduce the country’s overdependence on imported gold.