If a small country Turkey can collect 200 tons from a public holding of 3500 tons can a large country like India with min 25000 tons not think of a plan to monetize 400 tons annually, it will be a shame and a matter of incompetency and inefficiency and non determination of the govt to do it.

If a small country Turkey can collect 2000 tons from a public holding of 3500 tons can a large country like India with min 25000 tons not think of a plan to monetize 400 tons annually, it will be a shame and a matter of incompetency and inefficiency and non determination of the govt to do it.

Turkey's policy makers realised the important contribution gold makes to the economy. In 2013, jewellery exports, most of which was gold, was $3.3 billion. PriceWaterhouseCoopers estimated that bar, coin and jewellery consumption and fabrication in terms of gross value addition contributed nearly $3 billion to the Turkish economy. In addition, gold recycling would have added $1 billion.

Turkey’s relationship with gold is similar to that of India. Gold plays an important role in its religion and culture. The Turkish Central Bank estimated that “under the pillow” stock of gold in 1984 was well over 2000 tons. Some reports indicate that in 2013, it was close to 3500 tons, which was around 12 percent of their GDP. However, unlike India, Turkey has a small but growing gold mining industry.

Due to this challenge, there is a lot of doubt in the public mind on whether to participate in this Scheme or not due to fear of being questioned. If the Government clarifies that the deposits by individuals up to a certain quantum (say, 500 gm per person considering Indian tradition and customs) be given immunity from questioning or harassment by the tax authorities, there can be a huge surge in the public participation of this Scheme and it can be a resounding success to cross 200 tons+ pa.

A large part of the ancestral gold lying in families as idle gold has been passed on from generations. In many cases, there is lack of proper documentation as these have been purchased by different members of the families at various points of time, some received as Streedhan, gifts on marriages and other social functions etc. As such in many cases, the depositor may face a challenge in presenting the related documentation (if asked under the Scheme).

May be the interest rates for shorter tenure (say, one year) could be 1.5 % and for longer tenures could be on a increasing scale ranging up to (say) 3 % for a 10 year period.
- Temples and Institutions may be offered a low rate of interest but privately held gold will only see light of day with a good interes proposition.
- This will motivate more and more people to lock in idle gold for longer tenures which can also give banks the leverage to lend the money in a profitable manner.

6.2Interest payment by Banks

- The past GDS 1999 failed to monitise privately held gold and only saw Temple and Institutional deposits as the interest offered was too low at 1% pa.
- The customers will only part with their gold, if they see a possibility of receiving a fair return on their asset.
- As such if the customer gets a tax free interest ranging between 2 % to 3 % per annum this may be good enough to attract the customer to bring in greater quantity of gold and will fail again

-Gold deposits do not receive satisfactory response on the scheme in the banks and there is was sales pitch made by the bank management.
-A gold deposit is managed in the same manner as a cash deposit by banks.
-Banks cannot assess, assay and estimate the gold content of any Jewellery / gold bard bought for the deposit.
-The time frame required for a bank to conclude a deposit will be 2 – 3 days.
-Most banks do not have the penetration required for this scheme
-The Scheme had no exemptions

Let us know some of the key reasons for the failure of the last Gold Deposit Scheme (1999) were –

-The scheme was never marketed efficiently across the country.
-Individuals failed to be targeted while the focus was on Temples and Institutions.
-Minimum limits on deposits were on higher side.
-Interest offered was not lucrative enough for depositors.
-Banks do not receive regular enquiries on gold deposits, so do not appoint dedicate staff.