gold monetisation scheme- promotion strategies
TRANSCRIPT
GOLD MONETIZATION SCHEME MBM 422 Term Paper
Presentation
Arjit Parashar, MBADayalbagh Educational Institute,Agra
CONTENTSMarketing PlanIntroductionMissionObjectivesPEST AnalysisSegmenting & TargetingConsumer Behaviour towards the productMarketing MixFABSuggestions Promotion of the SchemeReferences
MARKETING PLAN
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?
MISSION OF GMS
20,000 Tonnes Reason for 30% Trade Deficit
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.
PESTN Analysis
POLITICAL AND LEGAL ECONOMIC
SOCIO- CULTURAL
TECHNOLOGICAL
POLITICAL & LEGALFACTORS
GMS will be issued on behalf of the Government of India by the RBIRate of interest determined by the Central Government and advised to banks by RBISame 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 limitThe tenure of the deposit will be minimum 1 year and with a roll out in multiples of one year
POLITICAL-LEGAL
ECONOMIC FACTORS
• 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
SOCIO-CULTURAL FACTORS
Sentimental attachmentGold signifies social statusWomen’s special attachment with goldMarriages are incomplete without gold
SOCIO-CULTURAL
TECHNOLOGICAL FACTORS
Purity Testing CentresHallmarking 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 TestPreliminary XRF machine-test will be conducted to tell the customer the approximate amount of pure gold.
Fire Assay TestMelting the gold for conducting a further test of purity
Well equipped and secure refineriesStores Gold in vaults
TECHNOLOGICAL
SEGMENTING
BASIS OF SEGMENTATION ARE • Income • Age • Education • Geographic Location • Ownership of Gold
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.
AGE
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.
GEOGRAPHIC LOCATION Geographical location affects the 1. Life style2. Thinking about money ( Master or Servant)3. Spending patterns4. Investment Pattern
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
2007 report by McKinsey Global Institute (MGI),
SourceAs per census 2011
20 – 24(8.7%)
25 – 44(27.6%)
45 - 64 (13.5%) 65 – 79
(4%)
AGE
Geographical
As per census 2011
Rural 83.3 %
Urban37.7%
Education
Literate(64.8 %)
Illiterate
Male literate (75.3%)
Female literate(53.7%)
Level of education Absolute Numbers (000') Percent to LiteratePersons 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 28.4Primary 146,740 83,525 63,215 26.2 24.8 28.2Middle 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 degree386 259 128 0.1 0.1 0.1
Technical diploma or certificate not equel to degree3,667 2,901 766 0.7 0.9 0.3
Graduate and above 37,670 25,533 12,137 6.7 7.6 5.4
SourceAs per census 2011)
OWNERSHIP OF GOLDPrivate Gold
Institutional Gold
Sourcehttps://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.)
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
CONSUMER BEHAVIOUR TOWARDS GMS
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.
RELIANCE ON GOLD IMPORTS
Account for 30% of Trade Deficit
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.
The challenge will be to attract those who buy gold jewellery and for whom the
yellow metal is an intoxication.
The results of the survey are below and pretty much explain why gold demand in India will
remain strong forever.
Attitude Towards Gold Jewellery
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.
CONSUMER VIEW TO PREFER GOLDFOR 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
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 formThe impurities can reduce the weightTedious process
EFFECT OF TERMS AND CONDITIONS OF GMS
Minimum weight of pure gold should be 30 gmsSome payment in cash of jewelrySome payment in gold coins (10 gm, 5 gm, 2 gm, 1gm)Bank can consider the choice of a customerThe redemption of gold deposit would be in the gold value.
SOME QUESTION ARISE IN MIND OF CUSTOMER
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.
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.
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.
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.
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.
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.
IS THERE ANY WAY TO KEEP THE JEWELRY INTACT?
No, the jewelry would be melted in every case.
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.
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.
History of Failures
6.5%, 15-year instrument—was floated in
November 1962, but it could collect only 16.7
tonnes.
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
WAYS TO PROVIDE IMPETUS TO THE SCHEME
Product
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
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 InterestTaking gold as
collateral security
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.
GOLD SAVINGS ACCOUNTA Gold Savings Account will be
opened by depositors at any time with Scheduled Commercial Banks,
after subjecting themselves to the Know Your
Client
FEATURES OF THE SCHEMEELIGIBILITY 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.
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
FEATURES OF THE SCHEMEUtilization of Deposited Gold
Under short term-deposit, for:CoinsLending to Jewellers
FEATURES OF THE SCHEMEUtilization of Deposited Gold
Under medium and long-term deposit, for: Auctioning Replenishment of RBIs Gold Reserves Coins Lending to jewellers
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.
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
Price
PRICING STRATEGY
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%
INVESTMENT LIMITMinimum 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.
PRICING OBJECTIVES
Sales-Oriented Pricing
PENETRATION PRICING
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.
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.
PROMOTION
Promotion
Advertisement
Direct marketing
Word –of- Mouth
Marketing
Public relations
ADVERTISING TV promotion
Radio
Print Media
Regional Celebrity Endorsment
DIRECT MARKETING Gram Sabhas(Banners)
Internet and Social Media
PUBLIC RELATIONS Encouragement by jewelers
Bank Endorsement
Encouragement by jewelers
WORD-OF-MOUTH MARKETING
Encouragement by jewelers
Experience sharing from early buyers
FAB
FACILITY350 Hallmarking centers
3-4 hours expected time to gold saving account
Minimum gold deposit requirement is set as 30 gramsCustomer 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).
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
ADVANTAGES AND BENEFITS (FOR BANKS)
1. Lending to Jewellers
2. Invite Foreign Currency Inflow
3. Use Gold to Meet CRR and SLR Requirements
SUGGESTIONInterest 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
STRATEGY TO PROMOTE SCHEME
Any form of gold can be usedMinimum deposit of pure gold should be 30 gmsThe 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.
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 expenseYou will get true valueCash in place of gold easilyTax BenefitThe rate for the valuation of gold, at the time of the redemption on market rate.
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.
WEBLIOGRAPHYhttp://economictimes.indiatimes.com/topic/Gold-Monetization-Schemehttps://mygov.in/sites/default/.../Draftwww.dnaindia.com/topic/gold-monetisation-schemehttps://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=10084&Mode=0http://www.hindustantimes.com/business/have-gold-earn-interest-rbi-issues-norms-on-monetisation-scheme/story-ktLQPiNeyNLgQKuHCY8qgN.htmlwww.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.ecenaidunia.jagran.com/search/gold-monetization-schemezeenews.india.com/tags/gold-monetisation-scheme.htmlCensus 2011