If investors are disenchanted with equity and are moving out of mutual funds as well, where are they going? It is generally understood that they are moving to traditional investments like fixed deposits, post-office savings and gold. But what is now well-known is the phenomenal success of gold deposit schemes, which are a sort of recurring deposit scheme to encourage purchase of jewellery. At a time when gold prices are soaring, but the traditional demand for jewellery at Indian weddings and auspicious occasions remains unabated, gold deposits are apparently incredibly successful. Tanishq, the Tata group’s jewellery brand under Titan Industries, has apparently seen a big turnaround in its profits because of the phenomenal success of its Golden Harvest deposit scheme (with options of 12 and 18 months), which allows people to accumulate money to be redeemed through the purchase of jewellery.
According to a leading banker, Tanishq had a phenomenal 2.2 million investors, when India’s total investor population is just eight million. To encourage the interest-free investment, Tanishq offers a ‘bonus’ at the end of the investment. It is also creating loyalty programmes such as awarding bonus points that can be redeemed for special discounts as well as non-financial benefits like special previews, valet parking and invitations to entertainment events. The scheme, based on the chit-fund concept, owes its success to the word-of-mouth recommendation of thousands of women who have found a safe way to save for their jewellery. In fact, almost every top jewellery brand is now offering similar schemes.