The country’s top gold refiner, MMTC-PAMP, is working on a gold metal account scheme that would help small retail gold consumers deposit their gold, melt and earn interest on it. It is a move that could help mitigate the meagre gold supply situation in India which has caused a high current account deficit (CAD) owing to high imports.
This would go a long way in helping the country meet its ‘insatiable appetite’ for gold, Rajesh Khosla, Managing Director, MMTC-PAMP India, said. He was speaking on the sidelines of a press conference to announce the forthcoming India International Gold Convention to be held between September 12 and 14. The convention would discuss effective gold monetisation schemes.
India has the biggest resource of gold above ground in the world at around 25,000 tonnes. “This is in households and even if we to get a fraction, we can address the shortfall of 1 per cent because the annual requirement is around 900 tonnes and the economy can afford to import around 700 tonnes. The balance will be easily bridged by effective schemes,” he said.
A gold savings account needed to be treated as a rupee savings account, which would earn interest and be as easy to manage. The minimum deposit should be brought down to around 50 gram. “When ready, this scheme would address more than 90 per cent of gold consumers in India who do not possess more than 500 gram of gold. When mature, the interest is [paid] not in rupees but in gold and the investor has more gold in the account.”
The Reserve Bank of India too is convinced that this is the way forward “although its contention has always been the guarantee for the consumer about the purity of the gold. MMTC-PAMP has India’s first internationally accredited refinery since May 2014 being only one of 70 globally with a capacity of up to 150 tonnes. There are around 250 approved hallmarking outfits in India. MMTC-PAMP is working on advanced software for the scheme which would be ready by October, Mr. Khosla said. “It will take a while but we are in preliminary discussions with banks to finetune the scheme as it will involve a huge logistical exercise and has many stakeholders.”
