Following a poor response to its recently-launched gold deposit scheme, the Narendra Modi government is reportedly making efforts to attract a part of the gold held by rich temples in a bid to boost the scheme.
The gold monetisation scheme (GMS) was one of the three launched by Prime Minister Narendra Modi on 5 November aimed at curtailing the gold imported by the country.
So far, the scheme has garnered about 1 kg of gold while the other two schemes have done reasonably well. The lacklustre performance of the scheme has forced the government to shift its focus to temples to increase gold deposits under the scheme, sources familiar with the matter told Reuters.
"Convincing retail consumers is not an easy task, it takes time," said a senior official with a state bank, requesting anonymity. "We're planning now to focus on institutions like temples."
Customers depositing gold with banks under the scheme will be given tax-free interest. While the minimum quantity of gold to be deposited under the scheme is 30 gram, there is no upper limit for deposits.
However, Mumbai's two-century-old Shree Siddhivinayak temple is still not convinced about the benefits of the schemes.
The government may "intervene directly" in the matter if banks can't persuade temples to deposit some of their gold holding, as it planning to give fillip to the scheme to reduce imports and the country's current account deficit, said a Finance Ministry official.
Even though consumers get better interest rates under the scheme compared to such schemes in the past, it is becoming hard for the government to "break their attachment to jewellery".
One more reason for the weak response to the scheme is acceptance of only melted gold by banks. Due to the presence of impurities, melted gold could lead to a significant loss in weight, which may not be acceptable for many households and temples.
"After melting, banks will deduct impurity that will cut the net weight," said Narendra Murari Rane, chairman of the trust for the Siddhivinayak temple.
The Shree Siddhivinayak temple usually conducts auctions for gold jewellery donated by devotees, and "collects an additional 10% from the highest bidder". So, participation in the government's gold deposit scheme may deny the temple from going for auctions.
Nevertheless, the temple, which owns of 160 kg of gold, is contemplating participating in the scheme, according to sources.
The Tirumala Tirupati Devasthanams (TTD), a trust that manages one of the India's richest temples in Andhra Pradesh, will hold a meeting soon to discuss its participation in the scheme, said an official.