7:40 PM
If you have gold in the form of coins and bars, deposit it with a bank, earn interest
You can earn interest on the gold you may be putting aside for your children's wedding or as part of your portfolio. Banks accept deposits of gold and pay you an interest on it under their gold deposit scheme. This may help you do away with the need of a locker, while earning an income on it. At present, only State Bank of India (SBI) is offering this product.
WHAT IS A GOLD DEPOSIT SCHEME?
Under this scheme, you give your gold to the bank. The bank melts the gold and converts them into bars. This means that you may not want to deposit your jewellery with the bank. The bank melts the gold to as certain the pure gold content and its fineness. The weight of gold after melting and refining will be different from the actual quantity of gold deposited. The bank keeps the gold bars with it and then gives interest on it. The bank issues certificates against the gold deposit. The minimum gross weight of the gold should be 500g; there is no upper limit for the deposit.
WHAT'S THE INTEREST RATE?
The deposit can remain with the bank for three, four or five years.
The interest rates provided on the three-year deposit is 0.75% per an- num. For the other two time peri- ods, the interest rate is 1% per an- num.
However, the interest is com- puted not as a percentage of the monetary value of the gold depos- ited but as a percentage of the weight of the gold deposited and he interest is credited to the customer's account in cash and not n the form of gold. This means that if you deposit 1kg or 1,000g f gold for three years, you will earn an interest on 1,000g of gold nd not its current market value. The interest amount is convert- d into rupees and credited to the depositor's account. According o the SBI's website, the conversion into rupees will be made at he London AM rate (London's morning rate) and the Reserve ank of India's reference rate for dollars on the date of maturity r on the day of payment.
CAN I GET MY SOLID GOLD BACK ON MATURITY?
Yes, the bank gives you an option of taking the solid gold or its quivalent cash on the date of maturity of the deposit.
IS THERE A LOCKIN PERIOD?
There is a lock-in period of one year. If you want to withdraw af- er one year, you will have to pay a penalty.
