The finance ministry is considering a recurring deposit scheme for gold in banks or post offices.
Sources said the government had reduced imports of over 10 tonnes of gold through several tranches of the sovereign gold bond scheme and the recurring deposit scheme would accommodate investors who could not afford the Rs 3,000 for 1 gm of gold, the minimum investment in the bond.
The ministry is working on a scheme for investors to buy Rs 300-500 of gold per month. The recurring gold deposit scheme could address the needs of rural investors.
The gold will be credited in decimals of grammes till maturity of the recurring deposit scheme, which could be up to 10 years. On maturity the depositor will receive money equivalent to the total gold credited in her passbook at the prevailing bullion price. Every tranche of gold bonds, in contrast, matures after eight years and investors can sell the bonds on stock exchanges. No interest will be paid in the recurring gold deposit scheme, a source said.
My view: It appears that India is in the process of a gold monetization scheme that will allow many of the least wealthy to benefit from the store of value property of gold. In a world of low and negative interest rates combined with competitive fiat currency devaluations, this makes sense. One wonders if this is the beginning of the end for the US dollar’s reserve status as nations such as Turkey, India, China, and Russia accumulate large amount of gold or encourage their citizens to do so.