Commodity Online
KOCHI/MUMBAI: What do the temples in India do with the gold they get as offerings from devotees? In fact, some places like the Guruvayur temple in Kerala and the famous Siddhivinayak temple in Mumbai get quintals of gold as offerings. These offerings make these temples very rich and to protect these treasures is a big task for the temples now.

That will not be a problem any more. India’s biggest bank, the State Bank of India, has come up with a gold deposit scheme for big gold holders in the country. The bank has relaunched the gold deposit scheme this week.

SBI had published huge advertisements in national dailies this week announcing the gold deposit scheme. In fact, the rising cost of gold import has prompted the SBI to relaunch the gold deposit scheme, which will help bring privately-held stock of gold in circulation and reduce the country’s dependence on imported gold.

The scheme invites investors to deposit their surplus gold, in any form, with the bank and earn interest on the same.
It is targeted only to those affluent and high net worth investors, temples and trusts for whom gold is just another asset class.

The minimum amount of gold deposit is thus pegged at 500 gm (1/2 kg). Famous temples across the country are known to receive huge donations in gold and they are likely to be the most preferred customers for the bank under this scheme. The scheme may find its potential customers in Siddhivinayak Temple, Mahalaxmi Temple, Lalbaug Ka Raja and Shirdi’s Sai Baba Temple to name a few.

This scheme, which was first launched in November 1999 at the initiation of the then Union finance minister Yashwant Sinha in the Budget 1999-2000, did not go well with the public at large and was thus withdrawn. During its previous phase, the scheme had garnered 400 kgs of gold alone from Guruvayur Devaswom in Kerala.

The scheme is available only at select SBI branches. At present, only 50 branches across the country have been nominated to accept these deposits of which four are in Maharashtra.

The gold so deposited with the bank shall be checked for purity and melted at the Government of India mint. A certificate of purity will then be issued by the government, which can be used by the investor to claim back the gold after the maturity period. 

The bank has also clarified that the expenses incurred on assaying of gold shall be borne by the bank and will not be passed on to the customer. During the investment tenure, the deposited gold will earn an interest, which is currently tagged as 1% (3 years), 1.25% (4 years) and 1.5% (5 years).

The investment shall be locked-in for one year. Premature withdrawal, after the lock-in period but before the maturity, shall attract a penal interest of 0.5% if withdrawn within 3 years and 0.25% thereafter.

However, unlike the regular deposits, interest here is calculated in gms and not in rupees. Thus, an investment of 500 gms of gold for three years shall earn 5 gms of gold as interest per annum, compounded annually.

At the end of the maturity term, the interest so earned shall be converted into rupee equivalent of gold then and paid to the investor. For the principal investment, investor will have an option to claim back pure gold (0.999 purity) or cash equivalent of gold as on that day.

The scheme is also attractive from tax perspective as the interest earned as well as tax on any capital gains arising from rise in price of gold after maturity is exempt from tax. Gold so deposited has also been exempted from wealth tax.