Tapping domestic gold stock
Tapping domestic gold stock*
Through an amendment to its earlier instructions RBI has expanded the ambit of gold-monetization scheme on January 9, 2019 to enable charitable institutions and temples/religious bodies, among others, to invest their gold stock under the Scheme. The revised instructions give a new avenue for productive deployment of idle domestic gold stock. This is a welcome move from RBI. The new entities which have become eligible to invest their gold stock under the scheme need to be educated about the advantages of mainstreaming their gold stock. Issues of trust, faith, emotion and sheer laziness to take responsibility on the part of voluntary social workers who generally manage the affairs of Trusts and Boards of Management of religious bodies need to be addressed with care and deftness.
As the invested gold will not remain in the same shape (jewellery etc) charitable institutions and religious organizations particularly will have to identify investible portion from their gold stock.
Past experience shows, organizations do not spontaneously volunteer to part with gold, even if the investment fetches substantial returns. Perhaps, Tiruppathi is the only temple which earns substantial income from gold deposits. Other temples/religious bodies are sometimes secretive about even the quantity of gold in their vaults. Governments’ eye on every asset as an income source (read tax) also is behind this fear complex.
If Centre is serious about mainstreaming domestic stock of investible gold, massive efforts will have to be made to create awareness among the people about the benefits that will accrue to the country’s economy by deploying part of the surface gold stock productively. The availability of sovereign guarantee for the gold invested, professional handling of conversion of gold and timely payment of interest and return of gold or value of gold will have to be publicized in a business-like manner to attract investment.M G Warrier, Mumbai
*A slightly different version of this response has been published in Business Standard (Print edition, January 11, 2019)