Jewellers mull gold purchase schemes

The Indian government had announced a new Companies Act effective April 1, 2014, according to which gold purchase schemes were to be considered as public deposits, reports say. Following this, many jewellers had withdrawn their schemes, but are now considering re-launching their schemes as per the new Companies Act, reports say. Tanishq, Reliance Jewels and other jewellers had withdrawn their schemes, earlier.

The new Act required companies need to limit the rate of return to 12.5 percent unlike the prevailing 17-18 percent rate and to offer the period of upto 12 months only and cap the total deposits to 25 percent of their net worth, reports say.

The schemes provided jewellers with working capital, besides assuring sales and building long-term relations with customers, a much needed element in the retail jewellery industry. Reports suggest that with the gold deposit schemes being active, the industry had a total of around Rs.20,000 crore worth of consumer deposits in the schemes.

Jewellers are now re-looking to launch their schemes but in tandem with the new rules of the Companies Act, for a period of maximum 12 months.