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India's banks still dragging their feet with gold monetization scheme

Section: Daily Dispatches

By Sutanuka Ghosal
The Times of India, Mumbai
Friday, May 27, 2016

KOLKATA, India -- The Gold Monetisation Scheme remains a non-starter seven months after its introduction as most banks are yet to enter an agreement with collection centres and refiners, two players in the chain said. The scheme aims to unlock 22,000 tonnes of idle gold lying with Indian households and reduce the country's dependence on imported gold. Banks are not yet ready with their board approvals and GMS software to operate this scheme.

In the earlier gold deposit scheme the government mint took 180 days to settle their refining account but with 0.5 percent interest payout at that time. Banks were not impacted by this delay.

"Under the present GMS, the interest payout begins after 30 days and that too at 3 percent, which may bleed banks in cases where the refining accounts are not settled within seven days' refining time frame stipulated for refineries under GMS," said James Jose, secretary of the Association of Gold Refineries and Mints.

The two operating agencies of the GMS -- collection and purity testing centres -- run by BIS-recognised hallmarking and gold refineries are sitting idle, waiting for better GMS offtake. The GMS has so far mobilised about 2,800 kg of gold, mostly from temples and institutions and this has gone to the Indian government mint.


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