The document details a gold monetization scheme aimed at utilizing India's substantial gold reserves to boost the gems and jewelry sector and reduce reliance on gold imports, impacting the country's trade deficit. It outlines various aspects of the scheme, including market conditions, economic implications, target consumer segments, consumer behavior, and operational features, such as interest rates and deposit tenures. The scheme's success relies on changing consumer attitudes towards gold and making gold deposits attractive, despite a historical culture of gold ownership in India.

1. GOLD MONETIZATION
SCHEME
MBM 422 Term Paper
Presentation
Arjit Parashar, MBA
Dayalbagh Educational
Institute,Agra

3. CONTENTS
Marketing Plan
Introduction
Mission
Objectives
PEST Analysis
Segmenting & Targeting
Consumer Behaviour towards the product
Marketing Mix
FAB
Suggestions
Promotion of the Scheme
References

4. MARKETING PLAN

5. Monetization refers to a process of converting a commodity into
domestic currency– rupee. Gold Monetization refers to unlocking the
value of gold in terms of rupee.
What is
Monetisation?

6. MISSION OF GMS
20,000 Tonnes
Reason for 30%
Trade Deficit

7. OBJECTIVES OF THE SCHEME
To provide a fillip to the gems and jewellery sector in
the country by making gold available as raw
material on loan from the banks.
To be able to reduce reliance on import of gold over
time to meet the domestic demand.

8. PESTN Analysis
POLITICAL
AND LEGAL
ECONOMIC
SOCIO-
CULTURAL
TECHNOLOGI
CAL

9. POLITICAL & LEGAL
FACTORS

10. GMS will be issued on behalf of the Government of India by the RBI
Rate of interest determined by the Central Government and advised to banks by
RBI
Same KYC norms and identification applicable to opening a bank deposit
account.
The scheme would be restricted for Indian resident
The minimum quantity of 30 gram of gold need to be deposit, maximum no
limit
The tenure of the deposit will be minimum 1 year and with a roll out in multiples
of one year
POLITICAL-LEGAL

11. ECONOMIC
FACTORS

12. • Runs on gold rates prevailing in the market
• Yield value of gold depends on present market conditions
• Interest is free from TDS
Help in maintaining the country's Current Account Deficit within sustainable
limits by reducing dependence on gold Imports
• Purchasing Receipt of the gold need to be shown
Tax department might want to know if you have paid wealth tax on the gold in
the previous years
ECONOMIC

13. SOCIO-CULTURAL
FACTORS

14. Sentimental attachment
Gold signifies social status
Women’s special attachment with gold
Marriages are incomplete without gold
SOCIO-CULTURAL

15. TECHNOLOGICAL
FACTORS

16. Purity Testing Centres
Hallmarking Centres will act as ‘Purity Testing Centres’ for the
GMS as they are well equipped to conduct a test of purity of the
jewellery in a short span of time
Preliminary Test
Preliminary XRF machine-test will be conducted to tell the
customer the approximate amount of pure gold.
Fire Assay Test
Melting the gold for conducting a further test of purity
Well equipped and secure refineries
Stores Gold in vaults
TECHNOLOGICAL

17. SEGMENTING

18. BASIS OF SEGMENTATION ARE
• Income
• Age
• Education
• Geographic Location
• Ownership of Gold

19. INCOME:
This base of segmentation is chosen because
Transaction of Gold is directly associated with income.
Higher income increases risk taking ability of the investor.

20. AGE

21. EDUCATION
• Education makes an investor a rational and aware investor with
having at least basic knowledge about the economy and
financial system
• Education provide wisdom.

22. GEOGRAPHIC LOCATION
Geographical location affects the
1. Life style
2. Thinking about money ( Master or Servant)
3. Spending patterns
4. Investment Pattern

23. Deprived
(less than INR
90,000
Aspirers
(INR 90,000
– INR 2
lacks.)
Seekers
(INR 2lcs.– INR 5
lacks.)
Strivers
(INR 5lacks – 1
million INR)
Global Indian
(more than
INR 1 million)
INCOME

24. 2007 report by McKinsey Global Institute (MGI),

25. Source
As per census 2011
20 – 24
(8.7%)
25 – 44
(27.6%)
45 - 64
(13.5%) 65 – 79
(4%)
AGE

27. Geographical
As per census 2011
Rural
83.3 %
Urban
37.7%

28. Education
Literate
(64.8 %)
Illiterate
Male literate
(75.3%)
Female literate
(53.7%)

29. Level of education
Absolute Numbers (000') Percent to Literate
Persons Males Females Persons Males Females
Literate 560,688 336,534 224,154 100.0 100.0 100.0
Literate without educational
level $
20,023 11,361 8,662 3.6 3.4 3.9
Below Primary 144,831 81,148 63,683 25.8 24.1 28.4
Primary 146,740 83,525 63,215 26.2 24.8 28.2
Middle 90,227 55,940 34,286 16.1 16.6 15.3
Matriculation/Secondary 79,230 51,202 28,028 14.1 15.2 12.5
High secondary/
Intermediate/PreUnivercity/
Senior Secondary
37,816 24,596 13,220 6.7 7.3 5.9
Non technical diploma or
certificate not equel to degree
386 259 128 0.1 0.1 0.1
Technical diploma or
certificate not equel to degree
3,667 2,901 766 0.7 0.9 0.3
Graduate and above 37,670 25,533 12,137 6.7 7.6 5.4
Source
As per census 2011)

30. OWNERSHIP OF GOLD
Private Gold
Institutional Gold
Source
https://2ndlok.wordpress.com/2007/11/10/india-the-
worlds-richest-economy
3,000 tonnes, more than two thirds of the gold held in the US bullion
depository at Fort Knox, Kentucky,
(20,000 tones in jewelry, coins and gold bars.)

31. TARGETING
The target audience for Gold
monetization scheme will be a chunk of
people who are
01) Seeker, striver and global Indian
02) literate
03) In between 25- 55 years
Adopted strategy would be Niche
marketing strategy

32. CONSUMER BEHAVIOUR
TOWARDS GMS

33. BACKGROUND
India plans to implement a scheme to monetize all the
gold with households and institutions.
The success of the scheme though depends to a large
extent on changing the attitude of the Indian
consumer towards gold.

34. RELIANCE ON GOLD IMPORTS
Account for 30%
of Trade Deficit

35. IMPACT ON ECONOMY
It will bring down the nation’s
import bill, but it is not easy to
tackle 1.2 billion people’s
collective obsession with the
yellow metal.

36. The challenge will be to attract those who
buy gold jewellery and for whom the yellow
metal is an intoxication.

39. The results of the survey are
below and pretty much explain why
gold demand in India will remain
strong forever.
Attitude Towards Gold Jewellery

41. The 2012 survey from WGC shows that majority of the people they
spoke to have never exchanged/reset/redesigned/sold gold. The results
of the survey are below.

43. CONSUMER VIEW TO PREFER GOLD
FOR FOUR REASONS
Accumulation of money in other form
 Gold is not easily lost destroyed
Passed on from a generation to the next
 Light in weight
•Liquidated in times of need

44. CONSUMER POINT OF VIEW
Long-preserved, family-inherited, emotionally-critical
Lose its identity and ‘feel’ by melting it
Lower rate of interest
You can’t see it physically
The gold jewelry will lose its form
The impurities can reduce the weight
Tedious process

45. EFFECT OF TERMS AND
CONDITIONS OF GMS
Minimum weight of pure gold should be 30 gms
Some payment in cash of jewelry
Some payment in gold coins (10 gm, 5 gm, 2 gm, 1gm)
Bank can consider the choice of a customer
The redemption of gold deposit would be in the gold value.

46. SOME QUESTION ARISE IN MIND
OF CUSTOMER

47. WILL THIS SCHEME SUCCEED?
You can expect Gold Monetization Scheme a big hit.
Indians don’t easily part with their gold. The interest
rate of 2-3% is not big a draw for the gold lovers. It
requires pragmatism to put the gold in Gold
Monetization Scheme.
In my opinion, the Gold Monetization Scheme will take
the time to be moderately successful.

48. HOW SECURE IS MY GOLD?
It is government sponsored scheme, You should not
worry much about it. It is as secure as fixed deposit in
the bank. However, it is not clear that who will
compensate if a bank fails.

49. WHY GOLD MONETIZATION SCHEME
GIVE LESS INTEREST RATE?
The scheme is not a simple borrowing and lending
scheme.
Not only it gives interest, the value of gold also
appreciates. Since gold itself can’t be used for any
productive cause, the high return is not possible. The
interest rate depends upon the gold-loan demand.

50. CAN INTEREST RATE BE CHANGED
IN BETWEEN THE DEPOSIT PERIOD?
The government can change interest rate of Gold Monetization
Scheme in the future. It depends upon the profitability.
However, once an interest rate is fixed for a deposit, it will not
change for its tenure. At the time of the extension, the rate
may change.

51. CAN A BANK DENY TO OPEN GOLD
MONETIZATION SCHEME ACCOUNT?
Yes, A bank can deny to GMS account. The banks have to
fulfill the KYC norms. If a person can’t provide the required
documents, the bank can deny the gold deposit. The bank can
also ask for a declaration about the source of gold. You need
to give it, otherwise the bank has right to decline.

52. I HAVE FAMILY GOLD, IS IT ELIGIBLE
FOR GOLD MONETIZATION
SCHEME?
Yes, Family gold should be eligible for Gold Monetization Scheme. Exact norms
are awaited.

53. IS THERE ANY WAY TO KEEP THE
JEWELRY INTACT?
No, the jewelry would be melted in every case.

54. WHICH BANKS GIVE THE FACILITY
OF THE GOLD MONETIZATION
SCHEME?
Till now the list is not out. However, you can expect of those banks and
branches which deal with the gold deposit scheme.

55. IS HALLMARKING CENTER
AVAILABLE IN MY CITY?
There are 331 hallmarking centers in the country. The most of hallmarking
centers are concentrated in the southern and western part of the country. You
can check the hallmarking centers list to know the address in your city.

56. History of Failures
6.5%, 15-year
instrument—was floated in
November 1962, but it
could collect only 16.7
Another bond in March
1965 and it could mobilize
even less, only 6.1 tonnes.
The National Defence
Gold Bond scheme in
1980 raised 13.7 tonnes
Another gold deposit
scheme was approved by
the central bank in 1999

57. WAYS TO PROVIDE IMPETUS
TO THE SCHEME

59. Product

60. It is a process wherein a depositor deposits gold (say
jewellery, coin, etc.) with a bank which is then lent by the
bank to its borrowers (say jewellery makers), after melting
into gold bars.
Gold Monetisation Scheme

61. CORE BENEFIT
To make productive
use of unused gold
BASIC PRODUCT
Interest, Capital
Gain, Tax Benefit
EXPECTED
PRODUCT
No I.T. Enquiry to a
limit,
AUGMENTED
PRODUCT
Lucrative Interest
Rates
POTENTIAL
PRODUCT
Swap of Interest
Taking gold as
collateral security

63. ACCEPTING GOLD DEPOSITS
The banks will enter into a
Tripartite Legal Agreement
with refiners and Collection
and Purity Testing Centres
that are selected by them to
be their partners in the
scheme.

64. GOLD SAVINGS ACCOUNT
A Gold Savings Account will be opened
by depositors at any time with
Scheduled Commercial Banks, after
subjecting themselves to
the Know Your
Client

65. FEATURES OF THE SCHEME
ELIGIBILITY FOR THE DEPOSITOR
Resident Indians (Individuals, HUF, Trusts including
Mutual Funds/Exchange Traded Funds registered
under SEBI (Mutual Fund) Regulations and Companies)
can make deposits under the scheme.

66. FEATURES OF THE SCHEME
Tenure:
 A short-term period of 1-3 years
(with a roll out in multiples of one
year);
A medium-term period of 5-7
years and a long-term period, of
12-15 years

67. FEATURES OF THE SCHEME
Utilization of Deposited Gold
Under short term-deposit, for:
Coins
Lending to Jewellers

68. FEATURES OF THE SCHEME
Utilization of Deposited Gold
Under medium and long-term deposit, for:
Auctioning
Replenishment of RBIs Gold Reserves
Coins
Lending to jewellers

69. GRIEVANCE REDRESSAL
Complaints against banks regarding
any discrepancy in issuance of receipts
and deposit certificates through the
bank’s grievance redress process and
then by the Reserve Bank’s Banking
Ombudsman.

70. BENEFITS OF THE SCHEME
The gold monetisation scheme earns
interest for your gold jewellery lying
in your locker.
Your gold will be securely maintained
by the bank.
What About Capital
Gain Tax?2.5

71. Price

73. INTEREST RATE PROVIDED BY GMS
• SHORT TERM TENURE: MATURES BETWEEN
1-3 YEARS – 2.5%
• MEDIUM TERM TENURE: MATURES BETWEEN
5-7 YEARS – 2.25%
• LONG TERM TENURE: MATURES BETWEEN
12-15 YEARS – 2.20%

74. INVESTMENT LIMIT
Minimum Investment Limit: Gold which
weighs 30 grams of 995 fineness is
mandatory.
Maximum Investment Limit: There is no
maximum limit for depositing under
this scheme.

77. A gold deposit scheme launched
amid fanfare by Indian Prime
Minister Narendra Modi two
weeks ago has so far attracted
only 400 grams, an industry
official said on Thursday, out of
a national hoard estimated at
20,000 tonnes.

78. PLACE
Distribution strategy will be 1- level distribution Channel
Here
Manufacturer =Ministry of Finance
Retailer =Public sector and Private sector banks
Customer = Households and Dealers of Gold.

79. PROMOTION

80. Promotion
Advertisement
Direct
marketin
g
Word –of-
Mouth
Marketing
Public
relations

81. ADVERTISING
TV promotion
Radio
Print Media
Regional Celebrity Endorsment

82. DIRECT MARKETING
Gram Sabhas(Banners)
Internet and Social Media

83. PUBLIC RELATIONS
Encouragement by jewelers
Bank Endorsement

84. WORD-OF-MOUTH MARKETING
Encouragement by jewelers
Experience sharing from early buyers

85. FAB

86. FACILITY
350 Hallmarking centers
3-4 hours expected time to gold saving account
Minimum gold deposit requirement is set as 30 grams
Customer can withdraw gold at any stage
The customer will have the option of redemption either in cash or in gold,
which will have to be exercised in the beginning itself (that is, at the time of
making the deposit).

87. ADVANTAGES AND BENEFITS (FOR END
USERS)
As low as 30 grams of gold can be deposited.
There will be no income tax, wealth tax or capital gains tax levied on the
Gold Deposit Accounts.
Interest Rate on GMS would be 2.25% to 2.5%.
There is no maximum limit
Safety of Investment

88. ADVANTAGES AND BENEFITS (FOR
BANKS)
1. Lending to Jewellers
2. Invite Foreign Currency Inflow
3. Use Gold to Meet CRR and SLR Requirements

89. SUGGESTION
Interest rate should increase
More Profit sharing among stake holders
No Requirement of purchase receipt of gold
Hybrid Channel Strategy
Channel Integration
Loan availment facility should be added in the draft

90. STRATEGY TO PROMOTE SCHEME
Any form of gold can be used
Minimum deposit of pure gold should be 30 gms
The interest would be given in gold grams.
Breaking of lock-in period will be allowed.
There would be a penalty on premature redemption
including part withdrawal.
Minimum tenure is one year.

91. CONT..
Weight of gold remain same
GMS increases the weight of the gold according to the given interest rate.
No worry about security
Save locker expense
You will get true value
Cash in place of gold easily
Tax Benefit
The rate for the valuation of gold, at the time of the redemption on market
rate.

92. CONT…
The redemption of Gold Monetization Scheme would be in rupees.
Redemption of fractional quantity (for which a standard gold bar/coin
is not available) would be paid in cash.

93. WEBLIOGRAPHY
http://economictimes.indiatimes.com/topic/Gold-Monetization-
Scheme
https://mygov.in/sites/default/.../Draft
www.dnaindia.com/topic/gold-monetisation-scheme
https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=10084&
Mode=0
http://www.hindustantimes.com/business/have-gold-earn-
interest-rbi-issues-norms-on-monetisation-scheme/story-
ktLQPiNeyNLgQKuHCY8qgN.html
www.epw.in/budget-2015–16/gold-monetisation-scheme-
india.html
http://www.thehindu.com/business/all-you-need-to-know-
about-gold-monetisation-scheme/article7224428.ece