Highly wasteful form of holding imo. Govt should float gold banks and encourage folks to park their stuffs in it. The asset value can then be traded in the market through derivatives etc.
In current form, it is totally useless from credit point of view.
India's love affair with gold spans centuries and is rooted in the Hindu religion. One of the biggest annual buying seasons is the Diwali festival around October to November. Gold marriage dowries are widespread and with 70 per cent of the population rural, gold is financial security.
The Finance Minister in this year budget 15-16 proposed to develop an alternate financial asset, a sovereign gold bond, as an alternative to purchasing metal gold. The bonds will carry a fixed rate of interest, and also be redeemable in cash in terms of the face value of the gold, at the time of redemption by the holder of the bond.
India imports as much as 800-1000 tonnes of gold each year. Though stocks of gold in India are estimated to be over 20,000 tonnes, mostly this gold is neither traded, nor monetized, the Finance Minister said.
Proposed Gold Monetisation Scheme will replace both the present Gold Deposit and Gold metal Loan Schemes. The new scheme will allow the depositors of gold to earn interest in their metal accounts and the jewelers to obtain loans in their metal account. Banks and other dealers would also be able to monetize this gold.
Indian cold coin
The Government also proposed to commence work on developing an Indian gold coin, which will carry the Ashok Chakra on its face. Such an Indian gold coin would help reduce the demand for coins minted outside India and also help to recycle the gold available in the country.
Under a new scheme proposed by new Modi Govt that banks will provide interest on gold deposit.The country's top lender, the State Bank of India, offers 0.75 per cent to 1 per cent and only 15 tonnes of gold has been deposited so far.
