The two-century-old Shree Siddhivinayak temple in Mumbai, devoted to the Hindu elephant-headed god Ganesha, bristles with closed-circuit cameras and is guarded by 65 security officers.
It is one of India's richest temples, having amassed 158 kilograms of gold offerings, worth $67 million, and its heavily guarded vaults are strictly off limits.
India is the world's biggest consumer of gold, and its ancient temples have collected billions of dollars in jewelery, bars and coins over the centuries — all hidden securely in vaults, some ancient and some modern.
A few years ago, an estimated $20 billion worth of gold was discovered in secret subterranean vaults in the Sree Padmanabha Swamy temple in Kerala state.
Now, Prime Minister Narendra Modi wants to get his hands on this temple gold, estimated at 3,000 metric tons — more than two-thirds as much gold as is held in the U.S. bullion depository at Fort Knox, Kentucky — to help tackle India's chronic trade imbalance.
Modi's government is planning to launch a scheme in May that would encourage temples to deposit their gold with banks in return for interest payments.
The government would melt the gold and loan it to jewelers to meet an insatiable appetite for gold and reduce economically crippling gold imports, which accounted for 28 percent of India's trade deficit in the year ending March 2013.
25 percent cut possible
India's annual gold imports of 800 to 1,000 metric tons could be cut by a quarter if temples decided to participate in the scheme, government and industry sources said.
"We would be happy to deposit our gold to nationalized banks if the policy is beneficial, safe and earns good interest,'' said Narendra Murari Rane, chairman of the trust for the Siddhivinayak temple, portions of which are gold-plated.
But some Hindu devotees are not happy with the idea that their offerings could be melted down.
A Mumbai gold merchant, who said he and his father had donated around 200 kilograms of gold to Siddhivinayak and other temples over the years, said it would be a sin for the temples to earn interest on the gold offered to the gods.
"I make donations to God, not to any temple trust,'' the 52-year-old merchant said.
Modi would also like to convince Indians to open their family vaults, which hold an estimated 17,000 metric tons of gold in jewelery and other heirlooms.
But it will be much harder to persuade Indian families, who sometimes have little faith in financial institutions, to break with tradition and hand over gold passed down from generation to generation.
Rooted in Hinduism
India's love affair with gold spans centuries is rooted in the Hindu religion. One of the biggest annual buying seasons is the Diwali festival, around October to November. Gold marriage dowries are widespread, and with 70 percent of the population rural, gold is financial security.
Key to Modi's plan will be the interest rates offered for gold deposits. A similar gold monetization plan launched in 1999 proved ineffective, in part because the interest rates offered on gold deposits were regarded by temple officials as too low.
Under that scheme, India's top lender, the State Bank of India, offers 0.75 percent to 1 percent, and only 15 metric tons of gold has been deposited so far.
Temple officials at Siddhivinayak and Shri Saibaba Sansthan in Shirdi, both in the western state of Maharashtra, said they expected interest rates in the new scheme to be much higher and so would consider participating.
The government plans to reveal rate details when it launches the new scheme. Siddhivinayak's Rane said he expected at least 5 percent interest on gold deposits.
A successful gold monetization program could go a long way toward helping India reduce its trade imbalance.
India raised the import duty on gold, the country's biggest nonessential import, and imposed other restrictions in 2013 after the current account deficit hit a record $190 billion. If India can cut imports, that would pressure gold prices, which fell to a four-month low last month before recovering. Lower gold prices will then help India cut its import bill.
However, a successful scheme could also expose the government to potential risks, if gold prices were to take off and depositors decided to withdraw at the same time.
