Gold monetisation: Govt scheme to involve jewellers | Business Standard News

Gold monetisation: Govt scheme to involve jewellers | Business Standard News


The well-researched analysis has covered several factors which can cause set-backs as the scheme gets implemented.
The IIM Professor Errol D’Souza’s suggestion that the interest rate on gold deposits should be two to three per cent is realistic, in the Indian context. The fear of arbitrage does not stand to reason, as it will be too hypothetical to expect that anyone will take the trouble of taking gold on lease and deposit in India which temptation can easily be discouraged by appropriate disincentives.
The real challenge is presenting a user-friendly scheme which will attract individuals and organisations now holding on to solid gold as a ‘secure store of value’ to trust the ability of the government and implementing agencies to ensure the liquidity and protect the gold investments valued at ‘current’ gold prices. Whether the scheme succeeds or not, another area which needs quick attention is setting up world standard professional assaying centres.
In states like Kerala, the jewellers have a vested interest in maintaining the craze for ornament gold. Perhaps, they could think of hiring ornaments for occasions like wedding against gold certificates(issued against investment in gold which could get transferred from bride’s parents to the newly-wed couples). Hiring charges could be making charges plus administrative costs and interest for the value of ornaments hired for the period of use.
A related issue is dissuading individuals and organisations from abuse of the precious metal for gold-plating roofs and flag-masts.
Banks’ loss on account of maintaining CRR against gold deposits will be more than made good by the advantage banks will get by increasing the gold component in SLR(Statutory Liquidity Ratio) once they start receiving gold deposits.
M G Warrier, Thiruvananthapuram


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