Tag: Jewellers

Jewellers can now repay part of gold loan in physical gold, BFSI News, ET BFSI

Banking & Finance

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The RBI on Wednesday asked banks to provide an option to jewellery exporters and domestic manufacturers of gold jewellery to repay a part of Gold (Metal) Loans (GML) in physical gold. As per the extant instructions, banks authorised to import gold and designated banks participating in Gold Monetisation Scheme, 2015 (GMS) can extend GML to jewellery exporters or domestic manufacturers of gold jewellery.

GML is repaid in Indian rupees, equivalent to the value of the yellow metal borrowed.

Now, the Reserve Bank has reviewed the norms.

As per an RBI circular, “Banks shall provide an option to the borrower to repay a part of the GML in physical gold in lots of one kg or more.” subject to certain conditions.

One of the conditions is that the GML has been extended out of locally sourced or GMS-linked gold.

Also, the repayment had to be made using locally sourced IGDS (India Good Delivery Standard)/ LGDS (LBMA’s Good Delivery Standards) gold; and the yellow metal has to be delivered on behalf of the borrower to the bank directly by the refiner or a central agency without the borrower’s involvement.

Another condition is that the loan agreement should contain details of the option to be exercised by the borrower, acceptable standards and manner of delivery of gold for repayment.

RBI also asked banks to suitably incorporate all aspects into the board-approved policy governing GML along with concomitant risk management measures.

“Besides, the banks shall continue to monitor the end-use of funds lent under GML.” RBI added.

In 2015, the government had launched the Gold Monetisation Scheme to mobilise the yellow metal held by households and institutions in the country.



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Minimum deposit cut to 10 gm, jewellers roped in, BFSI News, ET BFSI

Personal Finance

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India launched a revamped Gold Monetisation Scheme that seeks to unlock an estimated 22,000 tonnes of idle gold lying at Indian households by reducing minimum deposit to 10 grams, involving jewellers, and making all state-run banks participate in it.

At least one third of the public sector bank branches in all towns will have to provide the revamped gold deposit scheme on demand with special designated officers, and the minimum deposit under the scheme has now been reduced to 10 grams from earlier 30 grams, finance ministry said in a notification.

The government will also request the private sector banks to participate in the revamped Gold Monetisation Scheme (GMS) that will incentivise participating jewellers.

According to the revamped GMS, in the first stage, issue of medium-term gold deposit (MTGD) and long-term gold deposit (LTGD) certificates by banks will be moved to a secure digital platform, to be developed by State Bank of India. Thereafter, a regulated securities depository will be designated by SBI to hold the certificates in a digital demat format.

GMS security will be tradable in market.

Jewellers will be encouraged to set up BIS-approved collection and purity testing centres (CPTCs) under the scheme. Participating banks and refineries will take steps to enter into agreement with sufficient number of CPTCs so that GMS can be offered in significantly larger number of branches.

Banks have also been permitted to buy Indian-refined gold from market and gold exchange under the scheme.

All these changes are expected to revive GMS that has remained a non-starter since its introduction in November 2015.

Mobilising most of the idle gold from Indian households will help the country reduce dependence on import of gold and address the issue of current account deficit.

“The revamped gold monetisation scheme will bring pathbreaking changes in the bullion and jewellery sector with the introduction of GMS security, repayment of GML in terms of Indian refined gold, allowing banks to buy Indian gold through exchanges, ease of GML loan, and reduction of minimum deposit to 10 grams from existing 30 grams,” said Surendra Mehta, national secretary, India Bullion & Jewellers Association.

He said including jewellers in GMS is a major move as Indian households trust their family jewellers and therefore mobilisation of idle gold lying in the lockers will become comparatively easier. “The involvement of jewellers to run GMS scheme shall make the entire scheme consumer-friendly and will benefit jewellers in big way,” Mehta said.



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