In an attempt to put the estimated 20,000 tonnes of gold households and temples on the subcontinent are hoarding to more productive use and alleviate pressure on its current account, the Indian government launched two new gold savings schemes a fortnight ago.
Announced in the finance ministry’s 2015-2016 budget, the gold deposits and sovereign gold bonds aim to monetize bullion held privately and make it easier to trade gold or use it as collateral for loans.
The bonds issued by the Reserve Bank of India have a minimum tenor of 5-7 years and will be restricted to 500g per person per year in denominations of 5g, 10g, 50g and 100g. Commercial bank gold deposits can be short term (1-3 years), medium term (5-7 years) and long term (12-15 years) and provide tax-free interest.
President Narendra Modi has taken a personal interest in promoting the monetization of gold inside the country but so far the results have been less than spectacular.
According to an industry official quoted by Reuters all of 14 ounces of gold worth $15,000 have been deposited at banks under the scheme.
A lack of assaying centres have been blamed on the poor performance and the government is pushing to increase testing centres to 55 and refineries to 20 under the scheme.
The Modi government also launched an Indian gold coin called the Ashok Chakra which has garnered more interest.