See: http://bharatkalyan97.blogspot.in/2015/11/mudr-implementation-must-if-govt.html Prof. Vaidyanathan argues that implementation of MUDRA will help make such schemes successful in mopping up gold with the public.
While MUDRA may help somewhat, I doubt if the Government should interfere with public preference for holding gold.
My suggestion will be to leave the gold with the mothers with whom it is safe. It is a foolhardy, amateurish attempt to fool around with Gold Bond schemes.
The primary factor is that Govt. bureaucracies and their surrogates like Banks (even MUDRA agencies) are suspect and are NOT trusted.
How much gold is really held with kabuliwala (aka NBFC, Non-banking Financial Companies) lenders as mortage for the loans given? How much of it is really in circulation by redemption of the mortaged gold and re-mortgage? I doubt if it is more than a miniscule percentage of the total gold held as jewellery and kept in safe custody of mothers.
I think the whole gold bonds scheme should be ABANDONED. One solution to the BOP problem is NOT to take gold into reckoning for computing the reserves held with RBI.
Leave the gold holdings where they are, where they are safe. Govts. have no business to mess around with mothers' preferences.
Sure, activate MUDRA. If in the next 5 years the MUDRA initiative results in moving India Uninc. away from the clutches of NBFCs and kabuliwallas, to the extent of 5% of the total borrowings by Uninc. one can declare MUDRA a success.
Let Finance Ministry get serious and start activating MUDRA to really achieve a target of 5% of the borrowing needs of India Uninc. in the next 3 years.
Kalyanaraman
At paltry Rs 150 crore, gold bonds scheme fails to glitter
MUMBAI: The government's much-touted sovereign gold bond scheme has failed to cut much ice with the public, if the final amount of about Rs 150 crore is any indication, say bankers, who also blamed the high issue price as the biggest dampener.
Public sector bankers whom PTI spoke to also attributed the many market holidays and affinity of the public towards physical gold for the subdued demand for ambitious sovereign gold bond scheme, which was the maiden offering by the government so far.
Although, the Reserve Bank has not formally disclosed the overall funds collected under the scheme, bankers pegged it at around Rs 150 crore.
Public sector bankers whom PTI spoke to also attributed the many market holidays and affinity of the public towards physical gold for the subdued demand for ambitious sovereign gold bond scheme, which was the maiden offering by the government so far.
Although, the Reserve Bank has not formally disclosed the overall funds collected under the scheme, bankers pegged it at around Rs 150 crore.
"The primary reason for this lower-than-expected collection is the higher issue price. The RBI had set it at Rs 2,684 a gram, whereas the market price was lower. Why should somebody buy at higher price," said a senior banker from a state-run bank.
He said his bank was targeting around Rs 50 crore from the scheme but could only collect one-tenth of it.
Market expert also vouched this, saying 4-5 per cent premium on the market price is not acceptable to a buyer, therefore the dismal demand.
"In our country, people like to worship physical gold on Dhanteras, which is an auspicious day to buy the precious metal. We cannot resist ourselves from buying gold," said another public sector bank official.
Prime Minister Narendra Modi, on November 5, had launched three ambitious schemes to reduce the physical demand for gold and fish out 20,000 tonnes of the precious metal worth USD 800 billion lying idle with households.
Modi launched the maiden sovereign gold bond, gold monetisation and the Indian gold coin scheme with much fanfare.
The first tranche of sovereign gold bond scheme was open for subscription from November 5-20.
"The collection under the scheme would have been better had the government started the scheme earlier. There were a few holidays during the subscription period which has impacted the response," said a senior official of a state-run bank.
However, some bank officials described the response as "reasonable", considering this was the first time the government launched such a product.