Gold Saving Accounts – An Artistic view of the process

 Gold Saving Accounts – An Artistic view of the process

At the outset, please do not be confused with Gold Category Bank Accounts. Gold category bank accounts are normal bank accounts, with special privileges. These special privileges are based on the Balances maintained in the respective accounts.

One of the trending articles under #savings, #gold, #retailinvestors, #investors

As on date, this article can be tagged under #FinFiction too.

Q: Why #FinFiction?

Ans: The exact operational guidelines are not yet released by the regulators. Hence, the discussions around Gold Saving Accounts, are still fluid.

Once the regulatory guidelines are released, the tagging can shift from #FinFiction to #Rbiguidelines

Gold Saving Accounts – Summary

Customers can open such gold accounts in banks offering this product and put in money on a regular basis.

They can withdraw the deposit at the prevailing gold price at any time. 

This is expected to reduce the demand for physical gold as an investment.

Apart from saving on locker rent, insurance etc to keep gold safely in their custody, the investors will also get returns on gold savings akin to that of the Gold Monetisation Scheme.

The complete details are expected around the 2022 Budget.

The discussions around the operational details have started between the Regulators and Banks.

Let us wait and see, as to how the scheme will unfold.

 

The concept of Gold Saving Accounts was mooted back in 2018 by NITI Aayog.

NITI Aayog via report titled ‘Transforming India’s Gold Market’ submitted to the Government for consideration in February 2018.

Highlights of the NITI Aayog Report are as below

Highlight 01) 5 Focus Areas i.e

A) Make in India in Gold

B) Financialization of Gold

C) Tax and Duty Structure

D) Regulatory Infrastructure

E) Skill Development and Technology Upgradation

Highlight 02) Page No 74 - Digital Payments

Highlight 03) Page No 92 – New Financial Product i.e The Gold Saving Account

 

Highlight 04) Page No 22 - Simultaneously, incentives need to be given for digital payments which could encourage shift in gold transactions and assist in migration to a formal marketplace.

Highlight 05) Page No 190 - Set up a dispute resolution mechanism:

Highlight 06) Page No 190 - Offer a rebate of 50% on the GST payable in an effort to incentivise investors to make digital payments

 

The above highlights are from a Digital Payments perspective

 

Option 01) Gold Saving Accounts @ Reserve Bank of India Retail Deposit Scheme

Reserve Bank of India Retail Deposit Scheme is already live. A good number of folks have already opened up accounts under the RBI RDS.

The Retail Direct Gilt (RDG) product is live under the RBI RDS.

The Gold Saving Account can be a new product under RBI RDS.

Reserve Bank of India FAQs can be read @ https://www.rbi.org.in/Scripts/FAQView.aspx?Id=145

Benefit 01) Investors need not fear of sudden closure of the GSA accounts due to bank closures or other associated issues.

Benefit 02) Investors can safely transact from their comfort of their homes. There is no dependency on scheduled banks offering the GSA product.

Benefit 03) People all over India will be able to invest in this product without any geographical barriers.

Option 02) Gold Saving Accounts @ Scheduled Banks

Benefit 01) Face to face interaction of account holders and bank staff for resolution of any queries.

Benefit 02) Opportunity for Non-Retail Investors to invest in Gold through Gold Saving Accounts.

Benefit 03) Unable to think any other benefit.

 

          The main drawback of Option 1 is that direct Cash deposits and Cash withdrawals will be difficult. However, this is not a major deterrent as we Indians are familiar with digital transactions.

Cash can be deposited in the primary bank accounts and funds moved digitally to Reserve Bank of India Gold Saving Account.

Similarly, funds can be moved from RBI GSAs can be moved digitally to the primary bank account and cash withdrawn.  

The Option 1 can be for Retail investors. The Option 2 can be for non-retail investors wherein the account opening documentation is more as compared to retail investors.

 

Click on the below links for more information on Gold Saving Accounts

Link 01 – Gold savings accounts likely to check widening current account deficit @ https://economictimes.indiatimes.com/news/economy/finance/gold-savings-accounts-likely-to-check-widening-current-account-deficit/articleshow/89054048.cms

 

Link 02 – Gold Savings Account: How GSA will make investments in gold easy, safe and rewarding @ https://www.financialexpress.com/money/gold-savings-account-how-gsa-will-make-investments-in-gold-easy-safe-and-rewarding/2410972/

 

Link 03 – 5 Reasons Why You Shouldn’t Invest In Physical Gold @ https://www.outlookindia.com/business/5-reasons-why-you-shouldn-t-invest-in-physical-gold-news-44865

 

Link 4 - Gold Savings Account: Features, Benefits, How to use and When to use @ https://freefincal.com/gold-savings-account/

 

Disclaimer: These are my personal views only. The bottom line is Safe ePayments. Nothing more - Nothing less.