Objective
GMS, modifies the existing ‘Gold Deposit Scheme’ (GDS) and
‘Gold Metal Loan Scheme (GML). This will mobilise gold held by households and
institutions in order to facilitate its use for productive purposes and to
reduce reliance on the import of gold.
Revamped Gold Deposit Scheme (R-GDS)
Basic features
General
i.
Deposits outstanding
under the earlier Gold Deposit Scheme will be allowed to run till maturity.
ii.
All designated banks
will be eligible to implement the scheme.
iii.
The principal and
interest of the deposit under the scheme shall be denominated in gold.
iv.
Persons eligible to
make a deposit - Resident Indians (Individuals, HUFs, Trusts including Mutual
Funds/ ETFs). Deposits in joint names are allowed. The existing rules of bank
deposit accounts will be applicable.
v.
All deposits shall be
made at the CPTC or designated branches at the discretion of the Bank.
vi.
Interest will start
accruing from the date of conversion of gold into tradable gold bars or 30 days
after the receipt of gold at the CPTC or the bank, whichever is earlier.
vii.
Gold accepted by CPTC
or bank shall be treated as an item in safe custody held by the designated
bank.
viii.
On the day the gold
deposited, starts accruing interest, the designated banks shall translate the
gold liabilities and assets in Indian Rupees by crossing the London AM fixing
for Gold / USD rate with the Rupee-US Dollar reference rate announced by RBI on
that day. The custom duty for import of gold will be added to arrive at the
final value of gold. This approach will also be followed for valuation of gold
at any subsequent dates and for the conversion of gold into Indian Rupees under
the Scheme.
ix.
Reporting – The
designated banks need to submit a monthly report on GMS to the RBI .
Acceptance of deposits
i.
The minimum deposit at
any one time shall be raw gold equivalent to 30 grams of gold.
There is no maximum limit.
ii.
All gold deposits
shall be assayed at CPTC:
Types of deposits
Short Term Bank Deposit (STBD)
i.
The deposit will be
for a period of 1-3 years and will be treated as their on-balance sheet
liability.
ii.
The deposit will
attract CRR and SLR from the date of credit. However, the stock of gold held by
banks will be an eligible asset for meeting the SLR requirement.
iii.
Banks may allow whole
or part premature withdrawal subject to minimum lock-in period and penalties,
as determined by them.
iv.
Banks are free to fix
the interest rates which shall be credited in the deposit accounts on the due
dates. This can be withdrawn periodically or at maturity.
v.
Redemption on maturity
will be either in Indian Rupee or in gold at the option of the depositor.
The option in this regard shall be made at the time of making the deposit and
shall be irrevocable.
vi.
Premature redemption
shall be in Indian Rupee equivalent or gold at the discretion of the designated
bank.
Medium and Long Term Government Deposit (MLTGD)
i.
The deposit will be
accepted on behalf of the Central Government.
ii.
This deposit will not
be reflected in the balance sheet of the banks. It will be the liability of
Central Government.
iii.
The deposit can be
made for a period of 5-7 years (Medium Term) or 12-15 years (Long Term) or for such period as may be
decided by the Central Government. The banks may allow whole or part premature
withdrawal subject to minimum lock-in period and penalties as determined by the
Central Government. Rate of interest on Medium Term deposits shall be 2.25% and that for Long Term shall be 2.5%.
iv.
Redemption including
interest accrued will be only in Indian Rupee equivalent of the value of the
gold and accumulated interest as per the price of gold prevailing at the time
of redemption.
v.
The gold received
under MLTGD will be auctioned and the proceeds will be credited to Government’s
account with RBI.
vi.
RBI will maintain the
Gold Deposit Accounts denominated in gold in the name of the banks that will in
turn hold sub-accounts of individual depositors.
Opening of gold deposit accounts
The rules regarding opening of gold deposit accounts shall
be same as applicable to any other deposit account of the bank. Those who do
not have an account, shall open a gold deposit account with zero balance before
tendering gold at the CPTC.
The banks will credit the STBD or MLTGD with the amount of
995 fineness gold as indicated in the advice received from CPTC, after 30 days
of receipt of gold at the CPTC.
Collection and Purity Testing Centres
i.
The Central Government
will notify a list of BIS certified CPTCs under the Scheme.
ii.
The banks will be free
to select and authorize the CPTCs out of the list notified by the Central
Government .
iii.
Each bank authorizing
a CPTC to collect deposit of gold on its behalf shall ensure that its name is
included in the list of such banks displayed by the CPTC.
iv.
The schedule of fees
charged by the CPTCs shall be displayed at a prominent place at the centre.
v.
Before tendering the
raw gold to a CPTC, the depositor shall indicate the name of the bank with whom
he would like to place the deposit1.
vi.
After assaying the
gold, the CPTC will issue a receipt showing the standard gold of 995 fineness
on behalf of the bank indicated by the depositor. Simultaneously, the CPTC will
also send an advice to the bank regarding the acceptance of deposit.
vii.
The 995 fineness
equivalent amount of gold will be final and any difference in quantity or
quality found after issuance of the receipt shall be settled among the CPTC,
the refiner and the bank in accordance with the terms of the tripartite
agreement.
viii.
The depositor shall
produce the receipt issued by the CPTC to the bank branch, either in person or
through post.
ix.
On submission of the
deposit receipt, the bank shall issue the final deposit certificate on the same
day or 30 days after the date of the tendering of gold at the CPTC, whichever
is later.
Transfer of gold to the Refiners
i.
The banks will be free
to select the refiners.
ii.
The CPTCs will
transfer the gold to the refiners as per the terms and conditions set out in
the tripartite agreement.
iii.
The bank may decide to
keep the refined gold either in the vaults maintained by the refiners or at the
branch itself.
iv.
The banks will pay a
fee to the refiner for his services as decided mutually.
v.
The refiners shall not
collect any charge from the depositor.
Tripartite agreement between the
designated banks, refiners and CPTCs
i.
Every bank shall enter
into a legally binding tripartite agreement with the refiners and CPTCs .
ii.
The agreement shall
clearly lay down the details regarding payment of fees, services to be
provided, standards of service, the details of the arrangement regarding
movement of gold and rights and obligations of all the three parties in
connection with the operation of the Scheme.
Utilization of gold mobilized under GMS
Gold accepted under STBD
i.
sell the gold to MMTC
for minting India Gold Coins (IGC), to jewellers and to other banks
participating in GMS; or
ii.
lend the gold under
the GML scheme to MMTC for minting India Gold Coins (IGC) and to jewellers.
Gold accepted under MLTGD
i.
Auctioned by MMTC or
any other authorized agency and sale proceeds credited to the Central
Government’s account with RBI.
ii.
The entities
participating in the auction may include RBI, MMTC, banks and any
other notified entities.
iii.
Gold purchased by a
bank may be utilized for any purposes indicated above.
Risk management
i.
Banks are allowed to
access the International Exchanges, London Bullion Market Association or make
use of Over-the-counter contracts to hedge exposures to bullion prices subject
to the RBI guidelines.
ii.
The banks should put
in place suitable risk management mechanisms to manage the risk arising from
gold price movements.
Oversight over the CPTCs and Refineries
i.
The Central
Government, in consultation with BIS, NABL, RBI and IBA, may put in place
appropriate supervisory mechanism over the CPTCs and the refiners.
ii.
The Central Government
may take appropriate action including levy of penalties against the
non-compliant CPTCs and refiners.
iii.
The Central Government
may also put in place appropriate grievance redress mechanism regarding any
complaints against the CPTCs.
iv.
The complaints against
the banks will be handled first by the bank’s grievance redress process and
then by the Banking Ombudsman of RBI.
GMS - linked Gold Metal Loan (GML) Scheme
General
i.
The gold mobilized
under STBD may be provided to the jewellers as GML. The banks can also purchase
the gold auctioned under MLTGD and extend GML to the jewellers.
ii.
The jewellers will
receive the physical delivery of gold either from the refiners or from the
bank.
iii.
The existing Gold
(Metal) Loan (GML) Scheme operated by nominated banks will continue in parallel
with GMS-linked GML scheme. All prudential guidelines for the existing GML
Scheme will also be applicable to the new Scheme.
iv.
The banks other than
the nominated banks shall be eligible to import gold only for redemption of the
gold deposits mobilised under the STBD.
Interest to be charged
The designated banks are free to determine the interest
rate to be charged on GMS-linked GML.
Tenor
The tenor of GMS-linked GML will be the same as under the
extant GML scheme
______________________________________________________________________________
Based on RBI Circular dt
22/10/15. Amended up to 3/11/15. Please visit www.rbi.org.in for any further clarification if
required…..Poppy
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