Old Gold Leasing
Risk Disclosure
Old Gold Leasing involves the leasing of physical gold (in the form of jewellery and/or bullion) to an eligible jewellery partner for a specified tenure, against an agreed lease yield payable in gold grams.
Customers should carefully consider the following risks and limitations:
Purity and Conversion Risk: When you are leasing old gold which is being melted, the quantity of gold credited to the customer's account is determined based on the weight and purity established following the standard melting and testing process. The final credited quantity may therefore differ from the customer's initial estimate of the physical gold being submitted.
Lock-in and Liquidity Risk: The leased gold remains committed for the agreed lease tenure. While we make best efforts to ensure prompt liquidity in the event that a customer wants to withdraw, you are contractually locked-in for a defined period - which is six months in the case of old gold leasing and can vary for each lease. Accordingly, customers may not be able to withdraw, redeem or otherwise access the leased gold prior to expiry of the applicable lock-in.
Unregulated Product: Gold Metal Leasing is not a regulated product and you do not have any recourse to RBI or SEBI in the event you suffer any losses.
Risk of Loss of Capital: Depending on their classification as a borrower, a jeweller who leases your gold generally provides some collateral to SafeGold. In an event of default, where the jeweller does not make the contracted lease rental payments or return of the original principal amount, SafeGold will exercise the collateral to purchase gold which will be transferred pro-rata to your SafeGold account. Depending on the quality of the collateral it is possible that the you suffer a loss of capital and cannot recover all or part of the amounts owed to you.
No Guarantee: Digital Gold India Private Limited (the “Company”) operates a platform which connects Lessors and Lessees of gold metal. The Company does not guarantee your capital or any returns and there is no recourse available on the Company to you.
Price Risk: In a gold metal lease, you remain the owner of gold and repayment is made in grams of gold. If the price of gold falls, the INR value of your gold will fall and if the price of gold increases, the INR value of your gold will increase. A gold metal lease does not assure you of any returns in INR terms, only a yield in gms of gold.
Tax Consequences: The Company shall deduct tax deductible at source (TDS) at the applicable rate from the monthly yield paid to you, based on the PAN number provided by you at the time of entering into the lease. Proof of the deduction (Form 16) shall be available on the platform the following quarter. However, you should consult your tax advisors to determine if you have any tax liability on the income earned from leasing out your gold.
For clarity, the lease yield is fixed and determined in gold grams in accordance with the agreed lease terms. Fluctuations in the prevailing market price of gold do not alter the agreed quantity of gold payable as lease yield and do not constitute a price-related risk under the product.