Prime Minister Modi on Thursday will launch the Gold Molestation scheme (GMS). Offered by the government of India, this scheme gives higher rates of interest (2.25 percent – 2.5 percent). Nothing could be a better news to those who possess gold as an investment asset, as until now the gold deposit schemes offered a very less that of 1 percent interest.
With an increase in GMS interest rates, the government is playing smart as this is the only way people would be willing to come out with their household gold.
Happy Diwali With Higher Interest Over Gold Monetization Schemes!
The director of Commtrendz risk management, Gnanasekar Thiagarajan said, ” for people who have gold as an investment asset, it is some good opportunity to gain some interest out of it”.
The government has proposed the following offer rates: medium-term deposit (5-7 years) is 2.25 percent and long-term deposit (12-15 years), which will actually not be much different from the current gold deposit scheme which is continuing for a very long time. The only benefit apart from the increased interest rate would be that initially only 500grams of gold could be monetized now one can benefit from this scheme with only 30grams of gold monetization. (also: Narendra Modi on Forbes List.)
The motive behind this scheme is to utilize the gold stock in the country so as to bring down its annual gold import estimated to be 800 tons. this would help the government cut down on the country’s account which is really heavy on to the country’s bills.
Though this might lust some while many assume that this might not be a big success as for Indians is not just a jewelry item or an investment asset, but represents Indian customs and traditions.
If we look at the GMS structures, it is about issuing of a certificate by the bank, it allows individual to walk into a test center to get the gold melted which eventually would be turned into gold bars.
Which makes it clear that this idea would not be accepted to many Indians, as gold is part of one’s wealth and heritage. Indian temples holder huge amount of gold, donated by the people in the form of offerings to the gods, these include special ornaments, antiques, it is against emotions of the millions of people, to let go of their entity.
The biggest example to this is SBI’S gold scheme, which was been in operation for past many years, the bank could only deploy only about 8 tons, making it obvious that the scheme failed to take off well.
On the other hand, it will be a huge challenge for the government to manage the flow of unaccounted wealth which is kept hidden in forms of gold bars and ornaments, the process would help legalization of the black money. and especially verifying the ownership of it.
It will be interesting to see how this new prospect paves its way into Indians love for the gold metal. Let us see how happy this Diwali is for the people and the government.