INDIA LURES GOLD INVESTORS WITH GOVERNMENT BOND, MONETISATION PLAN

NATURAL WITH HINDI AND ENGLISH SPEECH

DURATION: 1.36

SOURCE: ANI

TV AND WEB RESTRICTIONS: NO ACCESS ARD

India lures gold investors with government bond, monetisation plan

EDITORS PLEASE NOTE: THIS EDIT CONTAINS CONVERTED 4:3 MATERIAL

KEYWORDS: gold monetisation, gold bonds, Arun Jaitley, Reserve Bank of India, Finance Minister, investors

India will soon launch a sovereign gold bond and a scheme to mobilise tonnes of the metal stored in households, a move that mainly seeks to wean investors away from physical gold and cut massive imports.

SHOWS:

NEW DELHI, INDIA (SEPTEMBER 09, 2015) (ORIGINALLY 4:3) (ANI – NO ACCESS ARD)

1. INDIAN FINANCE MINISTER ARUN JAITLEY SEATED WITH TELECOM MINISTER RAVI SHANKAR PRASAD AND OTHER MINISTERS

2. (SOUNDBITE) (English and Hindi) INDIA’S FINANCE MINISTER ARUN JAITLEY SAYING: “Gold monetisation scheme was also approved by the cabinet today. People who have gold lying as an idle asset at home can deposit them to authorised banks. The deposits will also have tenures – short, medium and long terms.”

3. MORE OF JAITLEY SEATED

4. (SOUNDBITE) (Hindi) INDIA’S FINANCE MINISTER ARUN JAITLEY SAYING: “The cabinet has approved a sovereign gold bond scheme today. Under this scheme, investors won’t have to buy actual gold; gold bonds can be purchased.”

5. MORE OF MINISTERS SEATED IN NEWS CONFERENCE

NEW DELHI, INDIA (FILE) (ORIGINALLY 4:3) (ANI – NO ACCESS ARD)

6. GOLD JEWELLERY ON DISPLAY IN A SHOP

7. WOMEN BROWSING THROUGH JEWELLERY

8. CLOSE OF GOLD BANGLES

9. CUSTOMERS BROWSING

10. A WOMAN TRYING ON A GOLD BRACELET

11. MORE OF GOLD BANGLES ON DISPLAY

STORY: India will soon launch a sovereign gold bond and a scheme to mobilise tonnes of the metal stored in households, the Finance Minister Arun Jaitley said on Wednesday (September 09), a move that mainly seeks to wean investors away from physical gold and cut massive imports.

The country consumes up to 1,000 tonnes of gold per year – an appetite matched only by China – to make jewellery, offer to the gods or as a hedge against inflation. Indian households and temples have stacked away more than 20,000 tonnes of gold.

“Gold monetisation scheme was also approved by the cabinet today. People who have gold lying as an idle asset at home can deposit them to authorised banks. The deposits will also have tenures – short, medium and long terms,” Finance Minister Arun Jaitley told a press briefing on Wednesday.

But he said he was targeting mainly those people who buy gold as an investment and can benefit from a bond or by earning interest from banks for depositing the precious metal.

The deposited gold would be auctioned, used to replenish the Reserve Bank of India’s (RBI) reserves or be lent to jewellers, he said. Depositors can redeem in gold or cash depending on the tenure.

Huge gold imports were blamed for pushing the country’s current account deficit to a record $190 billion in 2013, prompting the government to hike its duty on imports to 10 percent, an all-time high.

It is, however, unclear if a gold monetisation plan will be able to curb imports. A similar plan launched in 1999 had failed partly due to low interest rates, and bankers fear a repeat unless the government funds lenders to implement the programme.

Jaitley declined to give details on how the government will make it attractive for banks.

He also said that the cabinet had approved a gold bond scheme.

“The cabinet has approved a sovereign gold bond scheme today. Under this scheme, investors won’t have to buy actual gold; gold bonds can be purchased,” he said.

The gold bond will be linked to the weight of the metal and will be issued by the RBI on behalf of the government. Its sale will be limited to Indian entities and interest rates will be decided by the government from time to time.

In May, New Delhi proposed that banks treat gold deposits as part of their cash reserve ratio, the share of deposits they are compelled to keep with the central bank, or the statutory liquidity ratio, the minimum amount of bonds they must hold.

But the government dropped the conditions after the RBI expressed fears that banks might hoard gold.

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