Public sector enterprise MMTC Ltd is looking at ways to bring out the idle gold with households, to meet the growing market demand even as the Reserve Bank of India's restrictions are expected to reduce its import.
The All India Gems and Jewellery Trade Federation (AIGJTF) has also proposed to the government to allow jewellers to act as agents of banks - the idea is to collect idle gold from consumers, melt it and deposit with banks and banks in turn can lend that to jewellers.
"Around 22,000 tonnes of gold is lying idle in the country without any use and the company is looking at bringing it out, purifying it and distributing again in the market," said M G Gupta, director - finance, MMTC.
Speaking to sector representatives and financial experts in Chennai in a recent conclave, he said: "We are looking at options on how we could bring out this gold to meet the unmeet demand." Sources said MMTC might be contemplating a gold deposit scheme. Banks have been asked to popularise such schemes but haven't. "It (the idea) is just in the initial stage and we have appointed an expert as consultant to give a shape to the idea," said Gupta.
Haresh Soni, chairman of AIGJTF, said: "We have suggested our members incentivise recycling of gold jewellery." Some are planning to offer zero refining charges and deducting a minimum amount as a loss when they melt old jewellery. This is to encourage customers to convert to new jewellery, with the latest designs.
MMTC, said Gupta, was speaking to jewellers on the practicality of the process in mind. Some jewellers had already shown interest in the plan, he added. He did say that a similar effort by the State Bank of India was not successful and the company had to take such instances into account.
Bhargav Vaidya, a veteran bullion analyst, said the interest on gold that comes as a deposit could be slightly lower than saving bank rates. He has suggested a detailed scheme to the government.