SBI Gold FD
With the effect of the Gold Monetisation Scheme launched by the Government of India in 2015. It issues direction to all Scheduled commercial banks except the regional rural banks to implement this scheme.
GMS is intended to mobilize idle gold in the capacity of households and institutions of the country to facilitate its usage for productive purposes. As a result, it will reduce the country’s dependence on importing gold from outside.
On the same note State Bank of India has come up with its gold deposit scheme which refers as the Re-vamped Gold Deposit Scheme (R-GDS/SBI Gold FD).
According to this scheme, customers can deposit their idle gold under R-GDS. Therefore, SBI provides safety and interest-earning on valuable metal lying idle in safe or bank lockers.
As a customer, you will earn interest as well put to productive use for the benefit of the country to lessen import gold from outside.
Therefore, if you’re a customer interested in placing SBI gold FD then you can submit your gold in the form of bars, coins, jewellery excluding stones and other metals.
To make a deposit under this scheme, you need to submit an application form, identification proof, address proof, and inventory form.
Type & Features
There are three types of SBI Gold FD based on their tenure. Let’s discuss the types with the salient features.
| Type | Features |
|---|---|
| Short term Bank Deposit (STBD) | |
| Tenure | 1 to 3 years |
| Rate of Interest | For 1 year: 0.05% pa Above 1 year and up to 2 years: 0.55% pa Above 2 years and up to 3 years: 0.06% pa |
| Repayment | Redemption of principal will be in gold or INR equivalent on the prevailing price |
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| Type | Features |
|---|---|
| Medium-term bank deposit (MTBD) | |
| Tenure | 5 to 7 years |
| Rate of Interest | 2.25% pa |
| Repayment | Redemption of principal will be in gold or INR equivalent on the prevailing price |
| Premature Payment Condition | Allowed for redemption after 3 years of lock-in period with a penalty on applicable interest rate |
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| Type | Features |
|---|---|
| Long term bank deposit (LTBD) | |
| Tenure | 12 to 15 years |
| Rate of Interest | 2.50% pa |
| Repayment | Redemption of principal will be in gold or INR equivalent to the prevailing price |
| Premature Payment Condition | Allowed for redemption after 5 years of lock-in period with a penalty on applicable interest rate |
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Deposit Quantity: Minimum deposit quantity is 10 grams of raw gold applicable for all tenures. However, there is no maximum limit for the deposit.
Broken Deposit: SBI accepts gold FD for broken periods i.e., 1 year 10 days, 5 year 20 days.
Nomination: Available only in a single name and individual capacity.
Interest Redemption: Customer can provide redemption option at the time of deposits.
Either one can opt to avail interest redemption annually using a simple interest option or else at maturity using compounding factor.
Eligibility
In addition to the main features of the SBI gold FD’s now let’s get into who all are eligible to make this deposit:
Resident Indians of the following categories:
- Individuals, singly or jointly
- Proprietorship & Partnership firms.
- HUFs
- Trusts including Mutual Funds/Exchange Traded Funds registered under SEBI (Mutual Fund) Regulations
- Companies
- Charitable institutions
- Central Government
- State Government
Also Read State Bank of India – Gold Coins Scheme | Features | Benefits | FAQs | 2021
Advantages of SBI Gold FD
Earn interest on Gold: It’s a great opportunity for households & institutions like temples to earn interest on the gold lying idle in a safe. Moreover, save their lockers charges by depositing with the certified banks.
Tax exemption: It also exempts customers with capital gain tax, wealth tax, and income tax. Even though the value of the gold increases by adding the interest on it.
Mobilisation of unused gold: This scheme was launched with an aim to reduce the dependency on import gold.
When a customer deposits their gold with certified jewellers then the demand for gold import reduces.
Flexible Redemption Options: While submitting the application form, the customer must declare the options of interest redemption.
Either they can redeem at the end of the financial year or else at maturity.
On the other hand, due to unseen conditions if someone wants to break this deposit before the said declared option then can pay a penalty on interest and redeem after a certain lock-in period.
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Disadvantages of SBI Gold FD
- Loss on making charges: These days making charges constitute of 5% to 30% of total cost of jewellery.
But if you monetise your gold with PVC as they will melt your gold and you may lose on making charges as jewellery will not intact any more. - Weight will reduce: While making the jewellery other metals also get mixed while melting that metal and assessing the quantity of gold, PVC will exclude the weight of the impurities which otherwise considered as weight of gold only.
- At the time of redemption: in case customer opt for physical gold equivalent to the value.
Then Bank charges 0.20% as administrative charges and same get adjusted against the quantity of the gold you will get at the end.
To sum up the pros and cons, I would say do not put your jewellery for monetisation to earn interest you will end up losing the total value of gold with making charges.
In case one would like to drive the max benefit only deposit gold bars and coins of 24k purity.
Applying Procedure for SBI Gold FD:
Time needed: 5 minutes
Here are the easy and simple steps for applying for a gold FD
- Branches
You may walk-in to any of the designated branches with your gold. Fill up the GMS Application Form. Pick-up counterfoil from branch executive. Therefore, the Branch representative will guide you for their Refiner’s Purity Testing centre coordinates (address and responsible person details).
- Purity Verification and testing Centre (PVC)
As directed then you can visit the Refiner’s Purity Verification and testing Centre (PVC). Provide the counterfoil followed by the Deposition of your Gold and the same will undergo the assessing and melting process.
PVC will provide a deposit receipt containing the Gold quantity with purity 995. - Submit
You may Submit the PVC’s receipt to the designated branch in person or through the post, within 30 days.
- Receipt
Once your receipt is received by the Branch then within 30 days of receipt of your gold at PVC centre branch will issue a Gold deposit certificate giving gold quantity, purity, tenure, interest rate and maturity date.