RBI amends its circular on Gold Monetization Scheme and stated that participating banks will get total commission of 2.5% including 1.5% handling charges and 1% commission under the scheme
The Reserve Bank of India has made a few amendments to its Master Direction on Gold Monetization Scheme. The modifications have been made in consultation with Central Government to make the Scheme more customer-friendly. The depositors will be able to withdraw medium term and long term government deposits pre-maturely after the minimum lock-in period of three years in the case of medium term deposits and after five years in the case of long term deposits. However, there will be penalty in the form of lower rate of interest for premature withdrawals depending upon the actual period for which the deposit has run. In the case of large tenders of gold, gold can be deposited directly with refiners wherever they have the assaying capacity. This will reduce the time lag between the time the raw gold is deposited and it starts bearing interest.
In exercise of the powers conferred under Section 35A of the Banking Regulation Act, 1949, the Reserve Bank of India hereby directs that the Reserve Bank of India (Gold Monetisation Scheme, 2015) Master Direction No.DBR.IBD.No.45/ 23.67.003/ 2015-16 dated October 22, 2015 be modified as under:
(i) The existing sub-paragraph 2.1.1 (iii) shall be amended to read as follows:
The principal and interest on STBD shall be denominated in gold. In the case of MLTGD, the principal will be denominated in gold. However, the interest on MLTGD shall be calculated in Indian Rupees with reference to the value of gold at the time of the deposit.
(ii) The existing sub-paragraph 2.1.1 (iv) shall be amended to read as follows:
Persons eligible to make a deposit – Resident Indians (Individuals, HUFs, Proprietorship & Partnership firms, Trusts including Mutual Funds/Exchange Traded Funds registered under SEBI (Mutual Fund) Regulations and Companies) can make deposits under the scheme. Joint deposits of two or more eligible depositors are also allowed under the scheme and the deposit in such case shall be credited to the joint deposit account opened in the name of such depositors. The existing rules regarding joint operation of bank deposit accounts including nominations shall apply to these gold deposits.
(iii) The existing sub-paragraph 2.1.1 (v) shall be amended as under:
All deposits under the scheme shall be made at the CPTC.
Provided that at their discretion, banks may accept the deposit of gold at the designated branches, especially from the larger depositors.
Provided further that banks may, at their discretion, also allow the depositors to deposit their gold directly with the refiners that have facilities to carry out final assaying and to issue the deposit receipts of the standard gold of 995 fineness to the depositor.
(iv) The existing sub-paragraph 2.1.1 (ix) shall be amended to read as under:
Designated banks shall inform the RBI of their decision to participate in the Scheme as soon as the policy to implement the Scheme is approved by their Board. They shall also report to the RBI the gold mobilized under the Scheme by all branches in a consolidated manner on a monthly basis as per the format given.
(v) A para No.2.1.1 (x) shall be included as under:
Tax implications on GMS shall be as notified by the Central Government from time to time.
(vi) A para No.2.1.1 (xi) shall be included as under:
The quantity of gold will be expressed up to three decimals of a gram.
(vii) The existing sub-paragraph 2.2.2 (iv) shall be amended to read as under:
The Medium Term Government Deposit (MTGD) can be made for 5-7 years and Long Term Government Deposit (LTGD) for 12-15 years or for such period as may be decided by the Central Government from time to time.
The rate of interest on such deposit will be decided by Central Government and notified by Reserve Bank of India from time to time. The current rate of interest as notified by the Central Government are as under:
(i) On medium term deposit – 2.25% p.a.
(ii) On long term deposit – 2.50% p.a.
The designated banks may allow whole or part premature withdrawal of the deposit subject to minimum lock-in period and penalties as under:
(i) Minimum lock-in period
A Medium Term Government Deposit (MTGD) is allowed to be withdrawn any time after 3 years and a Long Term Government Deposit (LTGD) after 5 years.
(ii) Penalty on premature withdrawal
The amount payable to the depositor on premature withdrawal shall be calculated as a sum of (A) and (B), as indicated below:
(A) Actual market value of the gold deposit on the day of withdrawal.
(B) Interest payable on the value of the gold at the time of deposit as under.
viii) A para No.2.2.2 (ix) shall be included as under:
Central Government has decided that for initial period of one year from the date of launch of the Scheme i.e. November 5, 2015, designated banks will be paid handling charges (including gold purity testing, refining, transportation, storage and any other relevant costs) for MLTGD at a flat rate of 1.5% and commission at the rate of 1% of the rupee equivalent of the amount of gold mobilized under the scheme.
