Gold Monetization Scheme Failing, Expert Suggests Increasing Interest Rates

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Gold Monetization Scheme Failing, Expert Suggests Increasing Interest Rates

Gold Monetization Scheme Rajesh Exports MD Suggests

It’s been more than a year-and-a-half but the gold monetization scheme launched by Modi government is still struggling to attract customers. Rajesh Exports MD, Rajesh Mehta, suggests that the interest rates are too low. This is not an attractive feature for the takers. Adding salt to their injury, there are gold loans offered by various banks and financial services that feature better parameters. Instead of earning small portions of interests, people would rather avail a huge loan on their gold assets.

As explained by Union Finance Minister, Arun Jaitley, the gold monetization scheme is a deposit tool that ensures the mobilization of gold possessed by Indian families and various financial organizations. The scheme was released in hopes that it would push gold as a productive and functioning asset instead of lying static inside a locker. The plan lets investors make Short Term Bank Deposits (SRBD) for 1-3 years and Medium/Long Term Government Deposits (MLTGD) for 5-15 years on 2.50% interest per annum. SRBDs will be taken into account only by the banks, while MLGTDs shall be accepted on behalf of the Government of India. The scheme is eligible only for Indian citizens and it accepts a minimum gold deposit of 30gms in form of bullion, bar, or jewellery.

In an interview, the Rajesh Exports MD mentioned the massive gold imports that are responsible for India’s trade deficit. In 2016, the scheme deposits were only 6,410 kg, which was less than 2% of the annual gold imports. Rajesh Mehta suggested that in order to make a good amount of deposits, the interest rate should be increased at least 6%. The current rate of 2.50% would only return Rs 2250 on a 30 gm gold asset. If the rates are increased, it will induce more gold sales, which is good for the gold sector. As a result, the economy will be less dependent on gold imports.

Sadly, the gold import duty is also high. Bhima Jewellery Chairman, B Govindan, pointed out that if the government wants to drive down the gold imports, then it has to make feasible and profitable decisions. The gold sector can bring in a lot of investment if it has a steady ascent on the graph.

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149 Comments

  1. Mohit Sinha says:

    In a country that incorporates gold into their daily lifestyle, the interest rate is certainly low. The government scheme is not helping the gold market in India. If the interest rates are increased, the trade is likely going to benefit and the gold markets will get a boost.

  2. Nipun Sehgal says:

    Gold bullion can be a great way of earning a good interest for the people only if the government increases the interest rate. Policies like these can only flourish the gold market in India if they are in favour of the masses. Rajesh Exports MD has a valid point.

  3. Alok Singhai says:

    From a gold refinery to the homes of Indian people, gold is amongst the most valuable asset. Increasing the interest rate will attract more people to the scheme, which eventually will help the gold trade internally in the country.

  4. Puneet Jain says:

    The government’s policies have not been up to the mark when it comes to the gold sector. They surely need to revisit their strategy and incorporate a better plan, wherein the interest rates are also revised.

  5. Ronil says:

    From retailing to now gold mining, the company will benefit the Indian trade on a global scale. The gold market in India will benefit from this step by Rajesh Exports.

  6. Prakash Singhai says:

    For better results, it’s important for the government to look into the main problem. The main problem is actually the interest rates as suggested by Rajesh Exports MD.

  7. Anik Patni says:

    The governments needs to work on upon the policies of gold which will be beneficial for all the gold players.

  8. Amol says:

    Hope trading becomes easier.

  9. Adwaith says:

    I personally don’t believe that increasing interest rates can help change fortunes. I think we are lacking because of reforms that were launched in last couple of years. Once they settle down, I think we will see a shift in focus.

  10. Jatin says:

    The MD of Rajesh Exports has a lot of experience when it comes to the things related to bullion. So, I am sure his suggestion can surely come handy.

  11. Devbrat says:

    Interest Rates issue needs to be encountered as soon as possible.

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  13. Mridul Sinha says:

    Very well said. The right advice to the government. Implement it to make things successful.

  14. Krishna says:

    There is actually nothing for the people to get attracted. There must be different schemes in the market, so that a common man feels like benefiting from investing in this type of asset.

  15. Jatin says:

    Great piece of information

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