<div>The move to come out with a “brand new” Gold Monetisation Scheme – or a new deposit-like offering – may prove to be a non-starter. While operational guidelines on the revised scheme is yet to be announced by the Reserve Bank of India, if the past is anything to go by, it will be a damp squib. </div><div> </div><div>Even under the existing gold deposit scheme, you and I can monetise physical gold, jewels or gold coins – deposit it in a bank and earn return in grammage on them. But its success has been limited due to high melting costs (and low caratage) and very high ticket sizes.</div><div> </div><div>The Report of the Working Group to Study `Issues Related to Gold and Gold Loans NBFCs in India (January 2013; chairman: K U B Rao) also noted that as the schemes are based on the gold content of the jewelleries, the customer will not get back the jewelleries in its original form but only the gold. “… this type of scheme was met with limited acceptability in the Indian context, as people have emotional and sentimental attachments with their gold jewels which are lying with them for generations”, it said.</div><div> </div><div>A case has been made for tax incentives on such schemes, including on gold bonds – which was also announced by Union Finance minister, Arun Jaitley, on Wedneday along with the gold deposit scheme. But the percentage of the population above the minimum limit chargeable to tax under Income Tax Act is in single digits. With a majority of gold buyers hail from the rural, some or many of them may not be subject to income tax; fiscal incentive route will not attract them. Of course, a case exists to offer such incentives to high net-worth individuals who may hold idle gold to diversify their portfolios.</div><div> </div>
