Tuesday, 1st March 2005 (3388 views)

India has introduced the idea of "paper gold", where people can now invest in the precious metal, without actual physical delivery and receipt.

According to the union finance minister the scheme should mean households would be able to buy and sell gold in units for as little as Rs 100.

The Gold Exchange Traded Funds (GETFs) have been set up by the Securities Exchange Board of India (Sebi) and the Reserve Bank of India (RBI).

Ashutosh Bishnoi, chief marketing officer at UTI Mutual Fund, told Business Standard: "The necessary mechanism for this has to be put in place. The first step in this direction should be to securitise gold as an asset since the funds cannot hold them in physical form."

People will be able to invest in gold contracts, options and futures certificates through the scheme.

In addition, Mr Bishnoi also called for the tax regime on gold to be amended as it would have a big effect on any gold transaction.

The idea is set to prove popular since around Rs 6,000 crore is thought to be spent from household savings on buying gold each year in India.

 

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