Curbs on gold deposit schemes drive down jewelry companies

gold deposit schemes

Tanishq, the jewelry arm of Titan; Anjali Jewellers and several other jewelry companies across the country are negatively stressed by the recent central government decision to restrict the percent of return through such schemes to 12.5%. Most jewelry company shares have fallen, Tanishq fell by over 4% today. Tanishq has already announced discontinuation of schemes – Golden Harvest, Swarna Nidhi etc. The ministry of Corporate Affairs has recently declared such schemes as public deposits. Apart from restricting the return on such schemes to 12.5% the new act also restricts the total deposits of the kind to under 25% of their net worth in a company.

The move by the government is aimed at restricting Ponzi schemes operating under the guise of jewelry companies and collecting funds from the public, as was reported from West Bengal. Few sources say that Titan accounts for over 15% to 20% sales this way amounting to over Rs.1300 crores. Several other companies are now working to circumvent the restrictions and looking at continuing the schemes.

“The monthly installment scheme was and is still extremely popular with the clients, as it’s the perfect platform for people of every walk of life to buy jewellery for themselves or their loved ones,” said Anargha Chowdhury, director of Anjali Jewellers.

Gem and Jewellery Trade Federation members are trying to make representations to the government in this regard.

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