The three gold schemes launched by the government will go a long way in putting the precious metal into productive use and would bring down bullion imports, analysts and industry players said.
Largest private sector lender ICICI Bank said these schemes are an important step towards unlocking USD 800 billion of gold wealth and channelising it towards development.
"The sovereign gold bond scheme serves as an effective financial investment instrument and still provides the benefits that consumers usually buy physical gold for. This will help re-balance the profile of household savings from more traditional forms of gold purchase towards a more productive form," ICICI Bank Managing Director and Chief Executive Officer Chanda Kochhar said.
On the gold monetisation scheme, she said this will constitute a new source of income for households for whom the metal served as a passive investment earlier, yielding no returns. This also has the additional benefit of reducing storage costs and eliminating security concerns.
Muthoot Pappachan Group, the only private company that has entered the gold recycling and purification business, said, "The best part of the scheme is that it eases the process of taking a gold loan for a customer, who can convert the bond into demat format also.
"Another benefit is that it gives additional cushion effect to customers by way of interest on the bond," Thomas George Muthoot, Director of the Muthoot Pappachan Group, told PTI.
Muthoot also said his company is planning to devise special packages to add fresh customers.
India Ratings principal economist Sunil Sinha said the three gold schemes are a welcome effort to reduce dependence on bullion imports, which has touched 562 tonne so far this year.
Although much would depend on how these schemes are rolled out, the chances of gold bond scheme succeeding are relatively high because investors of gold bars or coins may find gold sovereign bonds a better investment than holding a physical stock, as it would offer the benefit of gold without any handling and storage costs.
"We are hopeful that these initiatives will bring out the locker gold into the formal sector. These gold certificates/bonds will help reduce the country’s over-dependence on imports. These schemes will have the desired impact in long run," said Keyur Shah, Chief Executive Officer of Muthoot Precious Metals, the Muthoot Pappachan Group arm that runs its gold recycling business.