RBI: Banks are free to fix Interest Rates on Gold Deposit Scheme

The Reserve Bank of India issued guidelines for the Gold Monetisation Scheme (GMS)that allow banks to fix their own interest rates on gold deposits.

• The gold deposit scheme is aimed at mobilising part of an estimated 20,000 tonnes of idle precious metal with households and institutions.

As Per guidelines

• Banks will be free to set interest rate on such deposit, and principal and interest of the deposit will be denominated in gold.
• Depositor will get an option on redemption of principal and interest at maturity.
• The designated banks will accept gold deposits under the Short Term (1-3 years) Bank Deposit (STBD) as well as Medium (5-7 years) and Long (12-15 years) Term Government Deposit Schemes.
• The short term bank deposits will be applicable on cash reserve ratio (CRR) and statutory liquidity ratio (SLR).
• There will be provision for premature withdrawal subject to a minimum lock-in period and penalty to be determined by individual banks.
• 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 standards.