Banks free to fix interest rates on gold deposit scheme: RBI

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Reserve Bank of India has issued guidelines for the Gold Monetisation Scheme that allow banks to fix their own interest rates on gold deposits. The gold deposit scheme is aimed at mobilizing a part of an estimated 20,000 tonnes of idle precious metal with households and institutions. 

Key facts of the notification :-

  • The notification says that the designated banks will accept gold deposits under the Short Term Bank Deposit, Medium and Long term Government Deposit Schemes. 
  • As per the RBI guidelines, there will be provision for premature withdrawal subject to a minimum lock-in period and penalty to be determined by individual banks. 
  • Designated banks will accept gold deposits under the Short Term Bank Deposit (1-3 years), Medium (5-7 years) and Long term (12-15 years) Government Deposit Schemes.
  • The interest will be credited in the deposit accounts on the respective due dates and will be withdrawable periodically or at maturity as per the terms of the deposit. The short term bank deposits will attract applicable cash reserve ratio (CRR) and statutory liquidity ratio (SLR).
  • There is no bar for maximum gold deposit but the minimum deposit at one time should be raw gold equivalent to 30 grams of 995 fineness standard. The raw gold can be in the form of coins, bars, jewellery excluding stones and other metals.
  • The stock of gold mobilised under the scheme by banks will count towards the general SLR requirement, this will provide additional capital to banks for lending towards productive sectors.
  • The CRR is the portion of the total deposits, which has to be kept with RBI in cash, while SLR is the portion of deposit compulsorily parked in government securities. Currently, banks have to set aside 4 per cent of the total deposit for CRR while 21.5 per cent for meeting SLR requirement.
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