The RBI is awaiting a notification on stamp duty before the formal announcement of the guideline. "The yellow metal will be considered as a financial asset and it will not attract stamp duty. The sales tax also is likely to be waived," sources close to the central bank said. However, the deposits will be subject to income tax, wealth tax and capital gains tax. "The depositors will not be provided with any immunity scheme. The income tax department can ask them to reveal the source (of gold)," a banker said. However, it is unlikely to have any adverse impact on the accretion of gold deposits as the banks willprimarily target temples, trusts and small depositors for the yellow metal.

"The basic objective of floating the new financial product is to bring down the import of gold and put the country's gold reserve into productive use. We are targeting a deposit of 100 tonnes of gold in the first year," said another senior banker. In fiscal 1999, the country spent $8 billion on importing 818 tonnes of to gold.

The nominated banks will be required to maintain 3 per cent cash reserve ratio (CRR) on gold deposits. The statutory liquidity ratio (SLR) requirement is likely to be waived.

The finance ministry has already notified that the nominated banks will be allowed to hedge gold in the international markets. This will help banks manage price fluctuations. The provision of a lock-in period aims at helping banks in asset-liability management.

The State Bank of India (SBI), Bank of India, Corporation Bank, Canara Bank and Allahabad Bank have already submitted the draft of the scheme to the central bank awaitingcentral bank's approval. The SBI plan envisages a transferrable fixed deposit scheme which will offer rupee loans up to 90 per cent of the gold deposited and the interest rate will be linked to the bank's prime lending rate (PLR).

The scheme with a maturity of three to seven years will have a lock-in period of one year. Under the scheme, for a three year period, the bank will offer an interest rate of 2.75 per cent, 3 per cent for a maturity period of four years, 3.25 per cent for five years, 3.50 per cent for six years and 3.75 per cent for seven year. The scheme will offer premature withdrawal facility to deposit holders.