What changed
RBI deleted sub-para 2.2.2.(v) and renumbered subsequent sub-paras. It inserted a new sub-para 2.4 with detailed guidelines for MLTGD renewal/redemption, including depositor option collection at account opening, 120-day prior notice, and nominee details. Handling charges for new MLTGD from November 5, 2016 were set at 1.5% flat plus 1% commission; renewal deposits get only 1% commission.
What it means for you
Banks must now proactively capture depositor preferences (gold vs INR redemption) and nominee details at account opening, and send redemption reminders 120 days before maturity. This reduces operational ambiguity and ensures smoother redemption processes. The revised fee structure incentivizes banks to mobilize new gold deposits while recognizing lower costs for renewals.
What you must do
- Update account opening forms to capture depositor's redemption preference (gold/INR) and nominee details with share percentages.
- For existing MLTGD accounts, collect missing information and submit compliance report to RBI within six months from August 4, 2022.
- Implement system to send redemption notices at least 120 days before maturity, including branch list for gold redemption and administrative charges.
- Ensure depositor presents original deposit certificate for any redemption/renewal/premature closure.
- Align handling charges and commission structures as per the revised rates (1.5% handling + 1% commission for new deposits from November 5, 2016; 1% commission for renewals).
Who it affects
All Scheduled Commercial Banks (excluding RRBs) designated under GMS, Depositors holding MLTGD accounts, Bank operations teams handling gold deposit schemes
What happens if a depositor does not respond to the 120-day notice?
The circular does not specify a default action; banks must ask for response within 30 days. If no response, banks should follow up as per their internal policy, but no interest is paid for overdue period after maturity.
Can a depositor redeem MLTGD prematurely in gold?
No. Any premature redemption of MLTGD shall be only in Indian Rupees (INR), not in gold.
Are the revised handling charges applicable to existing MLTGD deposits?
The revised charges (1.5% handling + 1% commission) apply to new MLTGD deposits from November 5, 2016 onward. For renewals, only 1% commission is payable. Existing deposits before that date follow earlier rules.