According to recent survey conducted among gold owners in the country, the proposed gold monetization scheme by the Indian government is unlikely to lure customers.
The government had promised low deposit rate and tax-free returns to make the scheme attractive and acceptable to general public. However, gold owners do not feel enthused by the offers of the scheme, the survey noted.
Firstly, buyers of gold jewellery stated their unwillingness to part with their ornaments. They feel that there is no point in monetizing the gold which is regularly used by them. The 1%-2% returns offered by the scheme are irrelevant. The survey found that gold owners are willing to participate in the scheme only if it offers higher rate of returns at 3%-4%.
Secondly, the sentimental attachment to gold jewellery makes it difficult to convince a customer to deposit the gold into a scheme that requires him/her to melt it. Most gold owners were found unwilling to melt down their gold jewellery for a negligible return. Rather, they preferred keeping them in safe bank lockers. According to industry experts, the melting part may turn out to be the key factor that may likely drive gold owners away from the scheme. Moreover, customers are concerned about redemption in the form of gold at the end of the tenure.
Finally, many fear that by depositing gold into the scheme, they may unnecessarily come under the tax net. Although no questions may be asked by the bank at the time of making deposit, the tax department may come up with queries later on. Most of the household gold are inherited and do not have receipts of purchases.
As per the survey, customers are unwilling to getting their gold melted for low returns. However, they are willing to make future gold purchases in the form of bars and deposit them in the monetization scheme to earn whatever small returns offered by the scheme.