RBI announces gold deposit scheme

The Reserve Bank of India has announced the norms for the gold deposit scheme, in which resident Indians can make investments. Each bank can fix its own interest rates for the scheme. The scheme will have a tenure of three to seven years, and will have an initial lock-in period, as specified by each bank.

Under the scheme, banks will accept scrapped gold, and on the scheme’s maturity, repay in the form of a gold bar or the rupee equivalent of the gold price.

State Bank of India, Bank of India and Corporation Bank will offer about 3 per cent for depositors in their gold deposit schemes. These banks have tentatively fixed a range of 2.5 to 3.5 per cent for gold deposits. A final decision will be taken soon.

Other banks that are expected to announce similar schemes are Canara Bank and ABN Amro Bank.Again their rates will also hover around the 3 per cent mark.

It is obvious that banks were waiting for RBI permission to launch gold deposit schemes. Banks, it seems, have jumped at the opportunity, as they have announced their plans just one day after RBI's assent.

Deposit rates in gold deposit schemes are fixed by banks keeping in mind the global gold prices and the rates that will be attractive for their domestic depositors. The deposit rates are generally the result of a trade-off between the two.