SBI is among a few banks that have started getting gold under the new scheme, as it was already running old GMS, and those getting matured under the old scheme are also deposited under the new scheme.
So far, redeeming in the form of the metal or by returning gold on maturity was allowed only for short-term deposits of one to three years. Some temples, including the richest one, Tirumala in Andhra Pradesh, have opted for this but only in a small way.
Indian temples are estimated to have a combined 3,000 to 4,000 tonnes of gold. Including unofficial shipments, India imports a little over 1,000 tonnes of gold every year.
An officer from one of the richest temples in South India welcomed the RBI move and said temples would now come forward to deposit what they had. Sanjiv S Patil, executive officer at Mumbai’s Siddhivinayak Temple, agreed and said, “This was required; our committee also decided earlier that if they are not providing gold to gold, then it is very difficult.” The temple, he said, would be asking banks, in a day or two, to send proposals in this regard
Till now, for medium and long-term deposits under GMS, banks were offering to return a cash equivalent at the time of maturity. To replace their gold, temples will have to buy from the market but from the point of view of income tax laws, that is commercial activity and their exemption (under Section 80G of the I-T Act) could be revoked.
“This was a major hitch and has gone now,” explained an official from one of the big temples.
“If the regulation is giving gold to gold for medium and long- term deposits, then the temple would prefer that; it yields better returns,” said Patil.
Till now, the major issues which kept temples from this scheme in a large way included emotional attachment to the gold, worry on taxation and whether temples would lose the 80G status. Except the emotional issue, the other ones seem to have been addressed.
Currently, 2.25 per cent is the annual interest for medium-term and 2.5 per cent for long-term deposits. The short-term deal for Tirumala is 1.75 per cent, compared to the 0.75-1 per cent from many banks.
Only a little over three tonnes of gold has been deposited under the Scheme since November 5, last year when it was launched. Sources in refineries and hallmarking centres which are licensed for GMS said even this amount hadn’t come to them. “It might have gone to the Government of India mint,” said a refinery official.
So far, 17 hallmarking centres have been licensed to act as collecting and purity testing centres (CPTCs) under the scheme and have signed agreements with banks. Banks have to sign tripartite agreement with refineries and CPTCs under the scheme.
After the RBI relaxation, the ball is in the banks’ court. “Banks are waiting for their board meetings to approve GMS products,” said a sector official.
“Customers, CPTCs and refineries are ready for GMS. The Bureau of Indian Standards (BIS) and the National Accreditation Board for Testing and Calibration Laboratories are very slow in licensing new refineries. This also affects the offtake of GMS,” said James Jose, secretary, Association of Gold Refineries and Mints.
In all, 47 CPTCs are said to have got a licence from BIS, of which 17 have signed agreements with banks. The rest haven’t been able to as many banks are awaiting their board’s approval for GMS products.