The gold monetization scheme of the government has received a mixed response from retail investors. Nearly one tone gold demand (in terms of bond) came from the public under the sovereign gold bond scheme, but almost no offer to deposit gold under the Gold Deposit Scheme.
The two schemes were launched by the Ministry of Finance to fulfill the gold investment appetite of the households so that gold import can be curtailed.
As per the report by Department of Economic Affairs, the Sovereign Gold Bond Scheme has got 63000 applications for 917 kg of gold which is around Rs 246 crore. The first tranche of the scheme was launched between November 5 and 20.
On the other hand, only 400 gms of gold was offered under the gold deposit scheme. Government is thinking about restructuring of the scheme in the context of the muted response.
Under the gold bond scheme, investors in gold bonds will receive a nominal interest depending upon the gold borrowing rate in the international market. This rate is around 2-3% given the present trend. On maturity, investors will receive the equivalent of the face value of gold in Rupee terms. Bonds will be issued on behalf of the Government of India by RBI.
Gold deposit scheme is structured to mobilized gold from the public in physical scrap form. The scheme arranges purity testing centres across the country. Melting of jewellery gold into scrap or raw gold is was a major part of the scheme. Most of the gold in India is kept by households in jewelleries and melting and conversion this into physical gold has discouraged the people according to bankers.
Overall, the gold monetization scheme seems to be failed to raise interest among the public. Only Rs 246 crores was mobilized under the scheme in a country where thousands of crores of investment takes place in gold indicate that the scheme has not found appeal in the public.