Tirupati temple to deposit 2.3 tonnes of gold with PNB

Though for most this is just a news item but has interesting historical significance.

It is like the oldest form of bank depositing one of the oldest form of money (gold) with a modern bank. Tirupati temple to invest in Gold Monetisation Scheme just like Somnath temple did earlier. Tirupati temple opened a demat account earlier as well:

The Punjab National Bank (PNB) has offered highest rateof interest, 1.75 per cent per annum, to Tirumala Tirupati Devasthanam (TTD), which manages one of the richest temples in the world, for a three-year deposit under Gold Monetisation Scheme (GMS).  TTD will invest around 2.3 tonnes of gold with fineness not less than 0.995 in the PNB. While TTD will directly invest around 1.3 tonnes of gold, another one tonne of gold investment will be shifted from State Bank of India (SBI) where the existing gold investment matures in March.

TTD will invest another 1.4 tonnes of gold of mixed category — ornaments, articles, etc. — with Indian Overseas Bank. The bank will be responsible for taking the mixed gold to mint and getting it purified, including transportation, insurance, melting, conversion and assaying charges. For the refined gold, Indian Overseas Bank has quoted interest rate of 1.25 per cent per annum for a three-year deposit under GMS.

TTD prefers to redeem gold rather than cash at maturity, as offered under earlier Gold Deposit Scheme (GDS). According to the temple authorities, 4.5 tonnes of gold already in banks under GDS fetches an interest of 80 kg of pure gold every year.

It is like this big investor which can ask the govt to tweak its norms:

Earlier, the investment committee of TTD had decided to keep the gold corpus intact. In December, the committee said it would meet government of India and RBI officials, seeking amendments in medium-term and long-term deposits under GMS so that interest is paid in gold only.

The short-term deposits under GMS are similar to GDS, which is being followed by TTD. The temple management had earlier said that the existing rate of interest offered by banks on short-term deposits under GMS was very less and asked the banks for higher rate of interest.

One wonders how banking is actually done within these temples. They too have things like investment committee, deposit committee and so on. What would the discussions be like?

Infact, just like banks there must be unit temples as in temples with just one location/branch or branch temples as in temples with multiple branches. In case of multiple branches, the discussions could be similar to that we see in banks. How much contribution came from xyz branch, abc branch and so on. Just that there is no interest on these contributions so there is no liability risk per se. But there must be asset side risk given investments etc. However, as there are no deposits to be paid back, the temples can be very conservative in assets as well and not bother chasing yields.

It will be interesting to know more about the functioning of these ancient banks..

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