ASSOCHAM urges FinMin to set up Gold Bank & Gold Deposit
Account
03/07/2014 17:50
Apex industry body ASSOCHAM has recommended a proposal to the Finance Minister for setting up of Gold Bank and introduction of Gold Deposit Account (GDA) operated through scheduled commercial banks (SCBs) to minimize the smuggling of gold. The Chamber President Rana Kapoor said, “The Gold Bank would procure and retain gold abroad through offshore foreign currency borrowing. Using this gold backing from the Gold Bank, scheduled commercial banks can offer Gold Deposit Account to its retail customers and the Finance Minister could consider announcing it with the Budget.” The Gold Deposit Account (GDA), which will carry most of the features of a savings bank account, is conceptually different from the initiatives taken earlier to mobilize gold in the economy. It will have the option of being funded by currency deposit (INR) as well as by non-jewellery physical gold from the customer. The GDA will represent notional units of gold and provide gold price return in weight terms, which will be a deterrent to retail demand for physical gold. This has the potential to defer the need for import of physical gold. The ASSOCHAM chief further said given the inherent cultural appetite for gold in India along with its feature of being a natural hedge against inflation, the efficacy of administrative measures, beyond a threshold, could get diluted. Policy effort should, therefore, be towards incentivizing residents to defer the procurement of physical gold, which in turn, would defer gold imports to an extent possible.
03/07/2014 17:50
Apex industry body ASSOCHAM has recommended a proposal to the Finance Minister for setting up of Gold Bank and introduction of Gold Deposit Account (GDA) operated through scheduled commercial banks (SCBs) to minimize the smuggling of gold. The Chamber President Rana Kapoor said, “The Gold Bank would procure and retain gold abroad through offshore foreign currency borrowing. Using this gold backing from the Gold Bank, scheduled commercial banks can offer Gold Deposit Account to its retail customers and the Finance Minister could consider announcing it with the Budget.” The Gold Deposit Account (GDA), which will carry most of the features of a savings bank account, is conceptually different from the initiatives taken earlier to mobilize gold in the economy. It will have the option of being funded by currency deposit (INR) as well as by non-jewellery physical gold from the customer. The GDA will represent notional units of gold and provide gold price return in weight terms, which will be a deterrent to retail demand for physical gold. This has the potential to defer the need for import of physical gold. The ASSOCHAM chief further said given the inherent cultural appetite for gold in India along with its feature of being a natural hedge against inflation, the efficacy of administrative measures, beyond a threshold, could get diluted. Policy effort should, therefore, be towards incentivizing residents to defer the procurement of physical gold, which in turn, would defer gold imports to an extent possible.
