RBI has issued operational guidelines for Gold Monetization Scheme (GMS) in which it has allowed mutual funds to invest in these instruments.
In a circular, RBI has said, “Resident Indians (Individuals, HUF, and Trusts including Mutual Funds/Exchange Traded Funds registered under SEBI) can make deposits under the scheme.”
Last month, the Union Cabinet headed by Prime Minister Narendra Modi had given its go ahead to two gold savings schemes – GMS and Sovereign Gold Bond Scheme (SGBS) in order to curb the demand for physical gold and curtail excessive dependence on gold imports.
GMS enables households and jewelers to keep their gold with the banks and earn interest on it. The Finance Ministry intends to replace the Gold Saving Scheme with the GMS.
The deposits under the this scheme can be made for a short-term period of 1-3 years (with a roll out in multiples of one year); a medium-term period of 5-7 years and a long-term period, of 12-15 years.
Like a fixed deposit, breaking of lock-in period will be allowed in either of the options and there would be a penalty on premature redemption (including part withdrawal).
The amount of interest rate payable for deposits made for the short-term period would be decided by banks on basis of prevailing international lease rates, other costs, market conditions etc. and will be denominated in grams of gold.
For the medium and long-term deposits, the rate of interest (and fees to be paid to the bank for their services) will be decided by the government, in consultation with the RBI. The interest rate for the medium and long-term deposits will be denominated and payable in rupees based on the value of gold deposited.
The minimum deposit should be equivalent to 30 grams of gold of 995 fineness.
There is no maximum limit for deposit under this scheme. The gold will be accepted at the Collection and Purity Testing Centres (CPTC) certified by Bureau of Indian Standards (BIS) and notified by the Central Government. The deposit certificates will be issued by banks in equivalence of 995 fineness of gold.
