Class Room

Gold based deposit scheme - proposal Bankers are trying to moot a gold-based scheme to raise the long term deposits. The scheme will be designed to induce people to invest in the yellow metal while simultaneously offering banks a new source of funds. The 'Gold Accumulation Scheme' as it is being referred to, was discussed by bankers at a meeting convened by Indian Banks' Association on Thursday. The proposed scheme will work like this; A customer can buy gold by depositing the market price of the metal with the bank. The bank will provide the customer a receipt for physical deposit of gold. The customer can either get the gold in physical form or its value at the prevailing market price anytime after a specified period, say five or 10 years. A customer can keep on depositing funds ( in other words, buying gold ) at intervals of his convenience and accumulate it for 5-10 years. Interest at a nominal rate will be paid on the deposit. For the customer, it will work like a Systematic Investment Plan. On the other part, banks will buy gold futures to hedge against price variations.