| Date: |
13-09-2014 |
| Subject: |
'Simplify gold deposit scheme to incentivize small holdings' |
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PUNE: Monetization and financialization of gold holdings will help bring down the necessity to import gold and help check volatility in its prices, experts in the Indian bullion business space said on Friday.
It will be beneficial for the economy as well as the owners of gold lying in the safes in thousands of homes to bring it into the country's investment mainstream, they said while talking to the reporters on the sidelines of the 11th India International Gold Convention here.
Rajesh Khosla, managing director of Minerals and Metals Trading Corporation, said India is among the largest importer of gold and the country has 25,000 tonne gold lying with temple trusts, investors as well as consumers. "It is possible to bring a large part of this gold holding into the market for sale by monetizing process thus reducing dependence on imports," he said.
He said methods to monetize the gold stock could be bank schemes, gold bonds or mutual funds linked to gold deposits. "It is important to follow an inclusive approach to bring in small holdings by lowering the entry barriers and thereby garnering a sizeable volume of gold for refining and recycling," he said.
The minimum deposit volume of present gold deposits scheme which the Indian banks run has to reduce to as low as five gram so that the gold lying unused with people can come into the country's stock. "The bank customers will then get the freedom to open gold accounts which they can operate to withdraw or deposit on an ongoing basis. Also important will be to create world class refineries that will convert the ore into gold," he said, adding that presently the country imports only 10% of gold in ore form.
Rujan Panjwani, executive director of Edelweiss Financial Services, said it is difficult to imagine the demand for gold will abate anytime soon here as people look upon it as safe investment. "We can, however, strive to create regulatory and structural framework to encourage pooling of gold through banks to ensure its circulation in the economy," he said. Though it will be important to incentivize monetization and financialization of gold by making it attractive for all stake holders, he added.
"We have been containing the volatility in price by methods such as import duty hike or the 80:20 rule which laid down than 20 per cent of gold that is imported has to be sold to jewellery exporters and actually exported back. It is, however, necessary to address this volatility by long-term remedies with an inclusive approach," Panjwani said.
Additional director general for export promotion K P Singh said the government has been trying to bring transparency and traceability in gold deals and measures such as tax information exchange regime will help curb smuggling of gold into the country.
Source : timesofindia.indiatimes.com
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