Gold monetization scheme: With special focus on institutional gold

Abstract

In the light of increasing Current account deficit owing to the rising import of gold in to the country to meet the domestic demand, government has reconstituted past schemes to mobilize gold in an attempt to bring them in to the mainstream of the economy. A major effort under this scheme has been to utilize the historical gold reserves that lies with the institutions like temples in the vaults, which is of considerable quantum. The study taken up focusses on the newly introduced Gold Monetization scheme of the Government with respect to such institutional gold. Our efforts were to understand how different stakeholders in the scheme perceive the scheme and what challenges are they facing with respect to adoption of the same. Based on multiple field visits and interviews with Jewelers, religious bodies, bankers, policy makers, refiners we have been able to identify certain pertinent challenges. The study concludes that the reluctance from several religious trusts citing devotees sentiments are misplaced, if the monetization of such gold assets can be transparently put to welfare activities of such trust. Collection and Purity testing centers and Jewelers can be good marketers for such a scheme if the banks could come to agree on tripartite agreement for the same.