Gold Monetization Schemes launched by the Scheme

Yesterday, the Government of India launched three gold related investment schemes.  They are:
 
1.  Gold Monetisation Scheme (GMS)
2.  Sovereign Gold Bond Scheme
3.  Gold Coin/Bullion Scheme
 
Gold Monetisation Scheme (GMS)
– The scheme replaces the existing Gold Deposit Scheme, 1999.
 – Outstanding deposits will be allowed to run till maturity or premature withdrawal.
 – Resident Indians (individuals, HUF, Trusts including Mutual Funds/Exchange Traded Funds) can make deposits.
 – Minimum deposit at any one time shall be raw gold (bars, coins, jewellery excluding stones and other metals) equivalent to 30 grams of gold.
 – No maximum limit for deposit under the scheme.
 – The gold will be accepted at the Collection and Purity Testing Centres (CPTC) certified by Bureau of Indian Standards (BIS).
 – The deposit certificates will be issued by banks in equivalent of 995 fineness of gold.
 – The designated banks will accept gold deposits under the Short Term (1-3 years) Bank Deposit (STBD) as well as Medium (5-7 years) and Long (12-15 years) Term Government Deposit Schemes (MLTGD).
– There will be provision for premature withdrawal subject to a minimum lock-in period and penalty to be determined by individual banks for the STBD. The interest rate in the STBD will be determined by the banks.
– The interest rate in the medium term bonds has been fixed at 2.25 percent and for the long term bonds is 2.5 percent for the bonds issued in 2015-16.
– Interest will accrue from the date of conversion of gold deposited in to tradable gold bars or 30 days after the receipt of gold at the CPTC or the designated bank branch.
– Know-your-customer (KYC) norms apply for opening gold deposit accounts.
– The designated banks may sell or lend the gold accepted under STBD to MMTC for minting India Gold Coins (IGC) and to jewellers, or sell it to other designated banks participating in GMS.
– The gold deposited under MLTGD will be auctioned by MMTC or any other agency authorised by the central government.
– Designated banks should put in place a suitable risk management mechanism.
– Complaints against designated banks regarding any discrepancy will be handled first by the bank’s grievance redress process and then by the Reserve Bank’s Banking Ombudsman.
2.  Sovereign Gold Bond Scheme
– Price of gold per gram Rs2,684.
– Applications of issue of bonds will be accepted between 5-20th November. Gold bond issue will be on 26th November through banks, notified post offices.
– The gold bond will be issued by Reserve Bank of India (RBI) on behalf of the government.
– The gold bonds will be denominated in multiples of gram(s) of gold with a basic unit of one gram while the minimum investment limit is two grams.
– The maximum subscription is 500 grams per person per fiscal (April-March) and for joint holders, the limit will be applied on the first holder.
– Only resident Indian entities including individuals, Hindu undivided families, trusts, universities and charitable institutions can buy the bonds.
– The issue and redemption price will be in Indian rupees fixed on the basis of the previous week’s (Monday-Friday) simple average of closing price of gold of 999 purity published by the India Bullion and Jewellers Association Ltd.
– The bond tenure will be eight years with exit option beginning the fifth year onwards. The bonds will also be tradable in the bourses.
– The rate of interest will be 2.75% per annum payable semi-annually on the initial value of investment.
– Bonds can be used as collateral for loans. The loan-to-value (LTV) ratio is to be set equal to ordinary gold loan mandated by the Reserve Bank from time to time.
– Interest on gold bonds will be taxable as per the provision of Income Tax Act, 1961
– The capital gains tax shall also remain same as in the case of physical gold.
– Commission for distribution shall be paid at the rate of one percent of the subscription amount.
3.Gold Coin/Bullion Scheme
– First ever national gold coin minted in India.
– The coin will have the National Emblem of Ashok Chakra engraved on one side and Mahatma Gandhi on the other side.
– Coin weight 5 and 10 grams.
– A 20 gram bullion will also be available.
– The gold coin and bullion will carry advanced anti-counterfeit features and tamper proof packaging and hallmarked by Bureau of Indian Standards.
– The gold coin and bullion will be of 24 carat purity and 999 fineness.
– Initially to be vended through designated and recognised MMTC outlets and later through specified bank branches and post offices.
Source:  Moneylife.com
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