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Banks, jewellers yet to participate in gold monetisation scheme |
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KOLKATA: The gold monetisation scheme launched by Prime Minister Narendra Modi earlier this month may have to wait for some more time to take off properly since bankers and jewellers are still in the process of putting the basic modalities in place.
Moreover, some industry executives said, it remains to be seen whether Indian consumers will be ready to part with their family wealth even after the modalities are in place. "The entire scheme is in doldrums. Nothing is clear as of now," said Saurabh Gadgil, vicepresident of India Bullion and Jewellers Association.
Gadgil said the scheme has not been received well by consumers or traders. "Though initially a target was set to unlock some 10-15 tonnes of household gold in the current fiscal, we feel that it will not be possible to achieve anything close to the target," he said.
A mere 400 gm gold has been deposited in banks in the first fortnight since the scheme was launched.
Bankers as well as jewellers said it will take some time to put necessary modalities in place to make the scheme workable. Banks, refineries and collection-and-purity testing centres (CPTC) need to enter into tripartite agreements to kick-off the plan, they said.
"Unless the agreement takes place, we cannot accept gold from banks even if some consumers deposit it," said James Jose, secretary of the Association of Gold Refineries and Mints.
The government launched the scheme to unlock 20,000 tonnes of gold lying idle with Indian households. The move was aimed at reducing the country's dependence on gold imports and thereby addressing the issue of current account deficit. India imports 900-950 tonnes of gold annually to meet its local demand.
Under the current dispensation, the CPTCs will issue certificates of purity-based on fire assaying. But there are just about 33 CPTCs across India taking part in the scheme.
"Most of these centres are in Gujarat, Maharashtra and Kerala. So, the scheme will not make much of an impact in other centres," a senior banker said on the condition of anonymity.
There are 13,000 BIS-licensed jewellers in the country. They will be asked to give testing facilities for the scheme. Accreditation from NABL (National Accreditation Board for Testing and Calibration Laboratories), the agency that certifies the technical competence of a laboratory, will be mandatory for refineries.
Only four of the 15-odd refineries operating in the organised sector in India are BIS-approved. With the announcement of the gold monetisation scheme, refiners have now geared up for the BIS certification. Some have already submitted their application for certification and some are in the process of getting NABL accreditation, Jose said.
"What is more important to make the scheme work is setting up of purification and collection centres in district headquarters, as more than 60% of the gold is locked up in rural households," said Jose. Traders said consumers are not willing to part with their household gold also because a large section of them are finding the interest offered under the scheme not lucrative enough.
"Straight away they are losing the making charge of 10% on jewellery that they had paid when it is melted. A mere 2-2.5% interest will not attract consumers," said Gadgil.
Interest rate has been fixed at 2.5% for the long run and 2% for the medium term while banks are free to announce short-term rates.
Source : economictimes.indiatimes.com
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