Jewellers give thumbs up to Sovereign Gold Bonds scheme
Deepak Kumar | The Dollar Business
A day after the government announced the launch of sovereign gold bonds from November 26, Jewellers on Saturday said that the move will help in channelising the domestic stock of the precious metal and reduce imports. With the average annual imports of around 900 tonnes, India is the second largest consumer of the yellow metal after China. “For the start, it is good. It will help customers earn interests on gold which was earlier lying with them in physical form. Gold collected by refiners or banks will be parted to jewellers to do business in order to cut down imports. In return, the government would earn interests from Jewellers,” Ketan Shroff, spokesperson of the India Bullion and Jewellers Association Ltd. (IBJA), told The Dollar Business. The government on Friday announced that those interested in investing in the sovereign gold bonds scheme can apply from November 5 to November 20. The bonds will be sold through banks and designated post offices. “The bonds will be denominated in multiples of gram(s) of gold with a basic unit of 1 gram. The tenor of the bond will be for a period of 8 years with exit option from 5th year to be exercised on the interest payment dates. Minimum permissible investment will be 2 grams of gold,” Ministry of Finance said in a statement. The Sovereign Gold Bonds scheme will offer an interest rate of 2.75% and will be payable semi-annually on the initial value of investment. There would also be a 1% commission on the subscription amount for distribution of bonds. “I think 2.75% interest rate is good. The interest rate on gold deposits is even less in rest of the world. In most of the other countries, interest rate on the gold deposits is 1%. The government will lend it to jewellers and collect interest to pay 2.75% to the customers,” Shroff said. “We are okay with 2.75%. The government has also allowed jewellers to be part of this. I think the scheme will succeed,” Bachhraj Bamalwa, Director of the All India Gems and Jewellery Trade Federation (GJF), told The Dollar Business. The Sovereign Gold Bond is restricted to only Indian residents, including individuals, HUFs, trusts, universities, charitable institutions; and will be issued by Reserve Bank of India (RBI) on behalf of the government. As part of the scheme, an entity can’t deposit more than 500 gram per person per fiscal. In case of joint holding, the investment limit will be applied to the first applicant only.
October 31, 2015 | 4:47pm IST.