MUMBAI (Commodity Online): As Gold price continue to zoom, the various deposits schemes to use the yellow metal to make money or to take loan for you needs are multiplying across India.

Almost all the banks in India—the largest consumer of gold in the world—have various gold deposits schemes running, offering people monthly interests anything from 9% upto 15% per month per gram of gold. People in India put their gold ornaments in the banks to take money or a loan that they pay back in installments.

Gold Deposit Scheme (GDS) is in the nature of a fixed deposit in gold. The customers can deposit their idle gold under GDS which will provide them safety, interest earnings, tax benefits and a lot more.

How do these gold deposit schemes work in India? Commodity Online delves deep into one big gold deposit scheme, currently run by India’s largest public sector bank—the State Bank of India (SBI).

SBI says the gold deposit scheme plans to put to productive use the nearly 15,000 tonnes of gold reserves are lying idle in the Indian households.

Following are the main features of the Gold Deposit Schemes of SBI:

Purpose
 • To mobilize the idle gold in the country and put it into productive use.

• To provide the customers an opportunity to earn interest income on their idle gold holdings.

Eligibility Any Resident Indian of the following categories
(i) Individuals, singly or jointly (as Former or Survivor)
(ii) HUFs
(iii) Trusts
(iv) Companies

Minimum Quantity
500 gms of gold (gross) (No upper limit for deposit)

Period of deposit
3 yrs,4 yrs or 5 yrs

Rate of Interest & Payment
• The current interest rates are: 1% p.a. for 3 years, 1.25% for 4 years and 1.50% for 5 years.

• Interest is calculated in Gold currency (XAU) and paid in equivalent rupees.

• Interest rate is subject to change.

• Option for Interest Payment: Non-Cumulative (on 31st March) every year or Cumulative (On Maturity)

Acceptance of gold
• Gold i.e. Gold bars, Coins, Jewellery etc. will be accepted in scrap form only.

• Customers to submit Application Form, Identification Proof, Address Proof and Inventory Form.

• Provisional Receipt issued at the time of acceptance of gold.

Issue of Gold Deposit Certificate
• Gold Deposit Certificate will be issued by Nodal Branch (i.e. Bullion Branch, Mumbai) after the gold is melted, assayed and minted at India Govt. Mint (IGM).

• The certificate will be issued for pure gold contents (i.e. in 999 fineness)

• Multiple certificates (max 5) can be issued

• Gold Deposit Certificate (GDC) will be sent to the depositor within 90 days from the deposit of gold.

Effective Date
Date of assay certificate of IGM or 30 days of receipt of gold whichever is earlier

Nomination facility
Available for deposits in single names in individual capacity

Transferability
Transferable by endorsement and delivery.
Transfer to be noted with Nodal Branch.

Repayment
Option to take repayment of principal either in gold or equivalent rupees as on the date of maturity

Premature payment
Premature payment permitted after a lock-in period of 1 year with a penalty on applicable interest rate

Renewal
Can be renewed any time after maturity provided the renewal is for a future period for the term and interest rate as available on the date of maturity

Loan facility
Rupee loans available at any branch of SBI upto 75% of the notional value of gold

Tax benefits
Exemptions from Income Tax, Wealth Tax and Capital Gains Tax available

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