How the gold deposit scheme may impact gold imports into India?
The gold deposit scheme is an important step towards developing the gold market in India. Gold banking has been introduced in the country for the first time. While gold collected under this scheme would be either lent or sold to traders and manufacturers, lenders would receive interest on the value of gold they deposit with banks. Following maturity of a deposit, a lender would have the option of either taking gold or cash worth his gold deposit. The success of the scheme would depend largely on how banks manage it, as well as on the rate at which gold is lent to traders. Import of gold is dependent on the demand factor. The other factor that will influence gold imports is the volume of deposited gold actually converted into jewellery to meet the demand. However, as the scheme is only a few months old and since the gold collected by way of the scheme has not been utilised yet, we feel it is too early to predict its impact on imports. In India, gold has traditionally played a multi-face
