RBI allows banks to fix interest rates on gold deposit scheme

Reserve Bank of India (RBI) has allowed banks to fix their own interest rates on gold deposits under the Gold Monetisation Scheme.
In this regard RBI has issued guidelines mentioning

• Banks are free to set interest rate such as principal and interest on the deposit denominated in gold.
• Designated banks will accept gold deposits under the Short Term Bank Deposit (1-3 years), Medium (5-7 years) and Long term (12-15 years) Government Deposit Schemes.
• The interest on the gold deposits will be credited in the accounts on the respective due dates and will be periodically withdrawable i.e. at maturity of the deposits.
• Short term bank deposits will be applicable cash reserve ratio (CRR) and statutory liquidity ratio (SLR).
• There is no bar for maximum gold deposit but the minimum deposit at one time should be raw gold equivalent to 30 grams of 995 fineness standard.
• The raw gold should be in the form of coins, bars, jewellery excluding stones and other metals
• Individual banks will determine the provision for premature withdrawal subject to a minimum lock-in period and along with the penalty.
• The designated banks may sell or lend the gold accepted under the deposit to Metals and Minerals Trading Corporation (MMTC) of India for minting India Gold Coins (IGC) and to jewellers or sell it to other designated banks.

Earlier, Union Government had given its approval to Gold Deposit and Monetisation Scheme in order to mobilize a part of an estimated 20,000 tonnes of precious metal lying idle with households and institutions into the banking system.

Month: Current Affairs - October, 2015