All you need to know about gold savings schemes
As a buyer one needs to be aware of the risks involved in case the retailer do not honour the terms and conditions of the scheme.
Here is all you need to know about gold savings schemes.
How do gold saving schemes work?
Gold or jewellery savings schemes come in two forms. A typical one allows you to deposit a fixed amount every month for the chosen tenure. When the term ends, you can buy gold (from the same jeweller) at a value that is equivalent to the total money deposited, including a bonus amount. This conversion is done at the gold price prevailing on maturity. In most cases, the jeweller adds a month's instalment at the end of the tenure as a cash incentive or may even offer a gift item.
Say, if one invests a fixed amount every month for 11 months. The 12th instalment, which is equal to your monthly contribution, is paid by the retailer. So, if you invest Rs 5,000 a month in the scheme, after 11 months you would have invested Rs 55,000 and the retailer will put in an additional Rs 5,000 as the last instalment. So, you will be able to buy jewellery worth Rs 60,000 by paying only Rs 55,000. Nowadays, jewellers either give discount of up to 90 percent of the last instalment or add that amount to the value of the gold on maturity.
Here are few such gold savings schemes. There may be changes in the schemes, hence confirm from the retailers before you save through them.
TANISHQ GOLDEN HARVEST
In Tanishq's Golden Harvest scheme, you can buy more than what you actually pay for because the company will add a special discount upon maturity. Under Golden Harvest, the buyer has to pay 10 monthly instalments (minimum Rs 2,000) and the maturity would start after 300 days from the date of enrolment. The buyer would be eligible for a discount of 75 percent of one month instalment upon completion of 365 days from the date of joining. If a customer redeems after 300 days but before the completion of 365 days, you will get a discount ranging between 55 percent and 75 percent of one month instalment depending on the number of days.
However, if you want to pre-close the scheme after paying 6 monthly instalments and after completion of 180 days but before 300 days from the date of first payment, Tanishq will refund the amounts aggregating to the instalments paid by the buyer until the date of refund and provide a prorated discount voucher that the buyer can utilize to purchase jewellery from the company. The buyer is mandatorily required to redeem the account before 421 days from the date of payment of the first instalment.
At the end of Golden Harvest, the customer can buy from 18 Karat diamond studded jewellery to 22 Karat pure gold jewellery from any Tanishq showroom across the country. Golden Harvest account holder can also take advantage of any ongoing offer at Tanishq and combine the Golden Harvest benefit with the ongoing offer to get the double advantage. One can also become a member of Encircle - Tanishq's exclusive loyalty program and enjoy special membership privileges across all formats, on enrolling for a Golden harvest account.
This scheme lets you to buy gold in grams, hence you get protected from the gold rate changes. In this scheme you can pay a flexible or fixed amount every month and the minimum amount being Rs 3,000. This scheme allows you to pay at any date of the month. While one has to pay a minimum of one instalment per month, one can pay any number of instalments in a month. One will automatically become eligible for Tanishq's loyalty program called "Encircle". As an Encircle member, you will receive points for every purchase that you make across all Titan's formats.
GRT GOLDEN ELEVEN FLEXI PLAN
On enrolling in the GRT Golden Eleven Flexi Plan of GRT Jewellers, you can select an amount of your choice as monthly advance payment. There are various slabs starting from Rs. 1,000 onwards. You will also get a pass book to keep track of your payments. All you have to do is pay 11 equal monthly advance payments.
Golden Eleven Flexi Plan- An illustration
After making the advance payment for the last month, you can buy your favourite jewellery, except special items like Diamond, Platinum, Uncut Diamonds, Ruby, Emerald, Ethnic and Vintage Jewellery, Pooja items, Silver articles & Silver jewellery without wastage / Value addition (VA) charges. The customer can opt for either the value based or the gold weight based option.
JOS ALUKKAS EASY BUY GOLD PURCHASE PLAN
Jos Alukkas Online Easy Buy is a jewellery purchase plan available online in instalments of Rs 1,000, Rs 2,000, Rs 5,000, and Rs 10,000. On regular remittance of 12 monthly instalments as per the scheme, the buyer can purchase jewellery and will be eligible for scheme promotion discount.
Under this scheme enrolment and payments have to be done by online mode only. The duration of the scheme is 12 months (360 days) and jewellery can be purchased either from Jos Alukkas website through online shopping option or from any Jos Alukkas showrooms. Purchases can be made after 30 days of last instalment but before 365 days from the date of joining.
Once you have chosen a scheme and made the first payment, you can't change the scheme. In the event of death of the account holder, the account is transferable only to the person who is nominated by the subscriber in the enrollment form at the time of joining the scheme.
An Example of Jos Alukkas Easy Buy plan:
Scheme Duration : 12 Months
Monthly Installment : Rs. 2000
Total Paid : 12 X 2000 = Rs.24000
Eligible Promotion Discount : Rs.1800 (Premium Discount - 90 percent of monthly instalment)
Total Purchase Amount : Rs. 25800
MALABAR GOLD & DIAMONDS SMART BUY SCHEME
Under this scheme you get, only BIS Hallmarked 916 Gold, free maintenance of your gold for life, free insurance for a year and a buyback guarantee. The buyer is also offered a 'Smart Buy' option, where one can make advance payments for any jewellery of one's choice.
It is important to note that under this scheme, one can only buy products that do not need resizing - necklaces, tanmaniya, nose pin, and pendants. To buy products which differ in sizes like, bangles, chains, bracelets, and rings, one has to opt for the 'Smart buy + Customize' option.
GOLDEN GAIN PLAN FROM MALABAR GOLD
The Golden Gain Plan from Malabar Gold and Diamonds is a great way to save while you're looking to purchase jewellery on instalments. The minimum monthly advance amount is fixed as Rs 1,000 per month. The fixed amount needs to be paid on due date of every month for 11 months.
From the end of 11th month you will be eligible to purchase jewellery at the prevailing gold rate without paying value addition (making charges) of 12 percent except for special ornaments. The benefit on making charges is limited to the amount accumulated only. In case making charges of jewellery selected is higher than 12 percent then difference will be collected. The stone charges if applicable and taxes on the jewellery is charged separately. This plan is exclusive online store plan and be used for redemption at any of our retail store.
An example: Let's assume that you have opted to pay fixed monthly advance amount of Rs. 5000 a month, for the next 11 months. At the end of 11th month, Malabar Gold & Diamonds will have your advance amt of Rs. 55,000 and you will be eligible to buy gold worth Rs 55,000 online.
On the date of redemption, the gold rate is Rs 3000 per gm for 22kt, so you will have gold of 18.33gms (55000/3000).
Suppose the jewellery selected by you is of 20gms and making charges is 15 percent of gold value. The selected jewellery is higher by 1.67gms than your eligible gold and making charge is also higher by 3 percent
So you will be required to pay additionally
- Gold Value Rs 5010 (1.67gm*Rs 3000/gm) towards additional gold.
- Making charges Rs 2401 (3%*55000+15%*5010)
- Tax @3 percent of overall value
With this plan you saved Rs 6600 (Rs. 55,000*12%) on making charges!
Watch the regulatory space
Buying into these schemes may hit a roadblock as there does not seem to be clear guidelines on gold savings scheme. As a buyer one needs to be aware of the risks involved in case the retailer do not honour the terms and conditions of the scheme.
As per the Tanishq website, "In the newly enacted Companies Act, which became a law on 1st April 2014, certain new rules were introduced, specifically under Explanation to Section 2(1) (b) of the Companies (Acceptance of Deposit) Rules, 2014 which came into effect 1st April 2014, which appeared to bring such schemes also under the definition of Public Deposits."
However, the Union Cabinet approved the Banning of Unregulated Deposit Schemes Bill, 2018, for introduction in Parliament after rising instances of people being defrauded by illicit deposit-taking schemes. It has to be seen whether these gold savings schemes fall under the Ponzi scheme category, said the India Bullion & Jewellers Association, which asked members to take steps before the bill becomes law.
If you wish to buy into such schemes, stick to reputed jewellers and diversify cross jewellers. Ensure all the receipts and documents are in place and payment record is shared by the jeweller with you. More importantly, stay away from offers and deals that appear to be too-good-to-be true.