First, Understand the Scheme Type
Jewellers offer two main types of plans. The most common is a savings scheme where you deposit a fixed amount for a set tenure, usually 10 or 11 months. At maturity, you can buy jewellery worth the total amount you've paid, plus a bonus, which is often
equivalent to one instalment or a discount. The other type is a straightforward EMI on a specific item you've already selected. Savings schemes are essentially unregulated deposits, while EMIs are typically financed through banks or NBFCs. Knowing the difference is key, as it affects your rights and risks.
Verify the Jeweller's Credibility
This is the most critical check. You are advancing money to a company for up to a year. While large, established brands like Tanishq or Joyalukkas have a long track record, many smaller, local jewellers also offer these schemes. The biggest risk is the jeweller defaulting or closing shop, which could lead to a total loss of your money. These schemes are not protected by the RBI or any government body in the way a bank deposit is. Therefore, stick to reputable jewellers with a history of honouring their commitments.
Scrutinise Making Charges and Wastage
This is where the real cost often hides. Making charges can range anywhere from 6% to over 25% of the gold's value, depending on the design's complexity. Some schemes offer a waiver or discount on making charges as their main benefit. You must ask whether the discount applies to all items or only a select range. Also, clarify wastage charges, which cover gold lost during manufacturing and can add another 5-10% to the cost. A 'free' instalment can be easily cancelled out by inflated making charges, so compare the final on-road price of the jewellery, not just the bonus.
Read the Fine Print on Price and Redemption
The terms and conditions booklet is your most important document. Check the policy on gold price. Is the price locked in when you start, or is it based on the prevailing rate at the time of purchase? Most schemes use the rate on the day of redemption, exposing you to price fluctuations. Also, understand the redemption rules. You are typically locked into buying jewellery only from that specific brand; cash refunds are not an option. What if you don't like any designs at maturity? What are the penalties for missing an instalment or exiting the scheme early? These are crucial questions to ask before you pay the first rupee.
Insist on Purity and Hallmarking
Whether you buy upfront or via an instalment plan, the rules for gold purity remain the same. Ensure the jewellery is BIS hallmarked. Since 2021, all gold jewellery sold in India must have a six-digit alphanumeric Hallmark Unique Identification (HUID) number. This code allows you to verify the item's purity and the jeweller's details on the BIS CARE app. Do not accept any jewellery without this mandatory mark of authenticity, as it guarantees the purity you are paying for.
Is the 'Bonus' a Genuine Benefit?
The lure of most gold savings schemes is the bonus instalment or discount at the end. For example, in a '11+1' scheme, you pay for 11 months, and the jeweller pays for the 12th. While this sounds like an attractive return, you must calculate its actual value. These schemes are legally structured to be an 'advance for supply of goods' to avoid being classified as a regulated financial deposit. The benefit you receive is often a discount on a future purchase, not interest on a deposit. Compare this benefit against the potential for inflated making charges or lack of flexibility. Sometimes, simply saving the money in a recurring deposit and buying gold during a discount sale could offer a better deal.
