AGARTALA, Oct 26 (TIWN): In a recent notification the Reserve Bank has issued a guideline on the Gold Monetisation Scheme that will now allow banks to fix their own interest rates on gold deposits. The RBI notification in this regard came ahead of the formal launch of the scheme by Prime Minister Narendra Modi on Novermber 5. The gold deposit scheme is aimed at mobilising a part of an estimated 20,000 tonnes of idle precious metal with households and institutions.

As per the guidelines, banks will be free to set interest rate on such deposit, and principal and interest of the deposit will be denominated in gold.

The designated banks will accept gold deposits under the Short Term (1-3 years) Bank Deposit (STBD) as well as Medium (5-7 years) and Long (12-15 years) Term Government Deposit Schemes. While the former will be accepted by banks on their own account, the latter will be on behalf of Government of India. The short term bank deposits will attract applicable cash reserve ratio (CRR) and statutory liquidity ratio (SLR). However, it said, the stock of gold mobilised under the scheme by banks will count towards the general SLR requirement, a move that will provide additional capital to banks for lending towards productive sectors.

However, it is to be mentioned here that the stock of gold mobilised under the scheme by banks will count towards the general SLR requirement, a move that will provide additional capital to banks for lending towards productive sectors. The CRR is the portion of the total deposits, which has to be kept with RBI in cash, while SLR is the portion of deposit compulsorily parked in government securities. Currently, banks have to set aside 4 per cent of the total deposit for CRR while 21.5 per cent for meeting SLR requirement. As per the RBI guidelines, there will be provision for premature withdrawal subject to a minimum lock-in period and penalty to be determined by individual banks.

On the eve of Diwali, the government will launch important gold-related schemes, including the Gold Monetisation, which will give a new direction to the economic development.