Summary of this article
RBI says no new gold monetisation scheme under consideration
Governor clarifies central bank's position on gold reserves
Focus remains on existing gold investment and deposit avenues
The Reserve Bank of India (RBI) Governor Sanjay Malhotra on Friday, June 5, stated that no proposal is currently under consideration to introduce a new gold monetisation scheme, providing clarity on speculation about possible measures to mobilise idle gold holdings.
Speaking at the post-Monetary Policy Committee (MPC) press conference, Malhotra said that there was no proposal before the central bank on launching a fresh gold monetisation programme.
The clarification comes at a time when gold has remained in focus amid rising prices and discussions around ways to channel household gold holdings into the formal financial system.
Clarification Comes Amid Questions On Gold Policy
The governor's remarks follow recent discussions around gold-related policy measures and reports on the management of the country's gold reserves.
Responding to questions on RBI's gold holdings, Malhotra also rejected speculation that the central bank had sold gold from its reserves.
"No. RBI has not sold gold. There has only been a marginal increase in our gold holdings," Malhotra said during the press conference.
He explained that fluctuations in the reported value of gold reserves are largely driven by changes in market prices rather than by any reduction in physical holdings. According to the RBI, movements in reserve valuations can occur due to periodic revaluation of gold based on prevailing international prices.
Background Of Gold Monetisation Efforts
The Gold Monetisation Scheme (GMS) was introduced to encourage households and institutions to deposit idle gold with banks in return for interest earnings. The scheme aimed to bring privately held gold into productive use and reduce dependence on gold imports.
However, over the years, due to various reasons, including concerns regarding the melting of jewellery, documentation requirements and relatively low returns when compared with the expectations of investors, participation in the scheme has been restricted.
Malhotra's comments indicate that there are currently no plans to introduce a new version of such a scheme.
Gold Remains An Important Reserve Asset
Gold continues to form an important part of India's foreign exchange reserves. RBI has steadily increased its gold holdings in recent years as many central banks globally have diversified reserve assets.
The governor's comments on Friday sought to separate discussions on reserve management from speculation about a new gold monetisation initiative.
The clarification also comes weeks after the government dismissed reports claiming that it was considering a proposal to monetise gold held by temples and religious institutions, stating that no such proposal was under consideration.
With the RBI ruling out any new gold monetisation scheme for now, the focus is likely to remain on existing channels through which households can invest in or monetise their gold holdings.
