India's cabinet approves new gold bond scheme with interest

Under the gold bond scheme, approved by a meeting of the cabinet presided over by Prime Minister Narendra Modi, up to 500 grams worth of bonds per annum can be bought by an individual with lock-in of five-seven years and appropriate interest so that they are protected from volatility.The gold monetisation scheme, also approved, calls for people to deposit their gold with authorised agencies for a short-, medium- or long-term periods, for which they will be given certificates of holding, Finance Minister Arun Jaitley said at a briefing.

"This will also bear interest," Jaitley said, adding: "This has been done to replenish the Reserve Bank's gold reserves."According to the World Gold Council, an estimated 22,000-23,000 tonnes of gold is lying idle with households and institutions in India. The annual imports amount to around 850-1,000 tonnes valued at $35 billion to $45 billion.Officials said the objective of these two schemes are three-fold: Mobilise idle gold with people, give a fillip to the gems and jewellery sector by making the metal available from banks on loan and reduce the reliance on imported gold and conserve foreign exchange.