New Delhi, May 20 (Agencies) : The government on Tuesday announced a new scheme offering tax-free interest on any gold that individuals and institutions deposit with banks as part of its strategy on Tuesday to monetise the huge stock of gold in the country, worth around Rs 60 lakh crore.

The minimum amount of gold that has to be deposited is as low as 30 grammes while the interest earned on the value of the gold would be exempt from income tax as well as capital gains tax.

According to the draft guidelines, a person or institution holding surplus gold can get it valued from BIS-approved hallmarking centres, open a 'gold savings account' in banks for a minimum period of one year and earn interest in either cash or gold units.
The tenure of the scheme has been proposed at a minimum one year and with a rollout option in multiples of one year, the guidelines said adding that it would be like a fixed deposit and breaking of lock-in period will be allowed.

Under the scheme, the bank's interest to the customer will be payable after 30/60 days of opening of the gold savings account.

The amount of interest rate to be given is proposed to be left to the banks to decide.
Both principal and interest to be paid to the depositors of gold will be 'valued' in gold, the draft norms said. For example, if a customer deposits 100 grammes of gold and gets one-per cent interest, on maturity he has a credit of 101 grammes.

Customers will have the option of getting their deposit back either in cash or in gold, which will have to be exercised at the time of making the deposit.

The idle stock of gold held by people that is 'neither traded nor monetised' is estimated to be more than 20,000 tonnes, which would be worth about Rs 60 lakh crore at the current market price.

A large amount of gold is also held by temples and other religious institutions. The draft scheme does not specifically mention the kind of institutions that would be covered under it.

India is one of the largest consumers of gold in the world and imports as much as 800-1,000 tonnes of the metal each year. The new scheme will allow the depositors of gold to earn interest in their metal accounts and the jewellers to obtain loans in their metal account.

The scheme, which is proposed to be initially introduced only in select cities, was announced in the Budget. To incentivise banks, it has been proposed that they may be permitted to deposit the mobilised gold as part of their CRR/SLR requirements with the Reserve Bank of India.

This aspect is still under examination, it said. Elaborating other benefits of the scheme, the guidelines said that banks may sell the gold to generate foreign currency.
The foreign currency thus generated can then be used for onward lending to exporters or importers. Banks may convert mobilised gold into coins for onward sale to their customers and can be used for lending to jewellers.