Mumbai, Oct 05: The Reserve Bank of India (RBI) has allowed banks to maintain a minimum cash reserve ratio (CRR) of 3 per cent and a statutory liquidity ratio (SLR) of 25 per cent on gold deposits. The RBI announced detailed guidelines on gold bond scheme on Tuesday.The scheme will have maturity range from three to seven years and the lock-in-period will be specified by each bank, an RBI release said. Other notable feature of the scheme is that rupee loans will be available against collateral of gold deposit to the deposit holders.
The scheme, an open-ended one, will be available on-tap. The central bank has not put a ceiling on the interest rates chargable by the banks. "Banks will be free to fix their own interest rates on the gold deposit scheme," it said.
The State Bank of India is likely to be the first on the block to announce the gold deposit scheme over the next few weeks. "We are fine-tuning the scheme," SBI deputy managing director Janaki Ballabh said.
Since most of the banks have additional SLR holdings, the reserve stipulation on the deposit scheme will not be issue, a senior banker said. Bankers are, however, awaiting the clarfifications on stamp duty and sales tax on the gold scheme.
According to the RBI guidelines, each bank will--within the framework set out by the central bank--devise a scheme in accordance with its own assesment of the market. "Banks proposing to introduce a gold deposit scheme will need to take the Reserve Bank's approval for introducing the scheme," it said.
The banks authorised by the RBI to deal in gold will be required to setup proper infrastructure and risk management system before launching the scheme.
"The scheme will be open for investment by resident Indians. Under the scheme, banks will either issue a passbook or a certificate or bond which will be transferable by endorsement and delivery," the RBI release said.
Gold deposits under the scheme will be accepted in scrap form only. "Banks will first subject the tendered gold to preliminary assay by a non-destructive method and depositors will have the option to withdraw the tender depending upon the results," it said.
The deposits will be repaid in the form of standard gold bar of 0.995 fineness or in rupee equivalent to the price of gold on the date of maturity at the option of the depositor.
ALL THAT GLITTERS
3 per cent CRR, 25 per cent SLR on deposits
Open ended scheme, available on-tap
Minimum maturity 3-7 years
Banks to decide on initial lock-in period
Bullion will be accepted in scrap form only
Banks to issue passbook, certificate or bond.Copyright © 1999 Indian Express Newspapers (Bombay) Ltd.