Glitter with risks: SEBI’s warning and India’s digital gold dilemma

For decades, Indian jewellers have done what no fintech startup could dream of: they convinced millions to lend them money without calling it lending. The famous “11-month gold plan” was the original Indian innovation. You paid every month, and in the twelfth month you were rewarded with an extra instalment — a kind of divine interest for your loyalty. Nobody asked why the jeweller needed the money in the first place. He was, after all, a man with gold.

It was an extraordinary business model. The customer believed they were saving; the jeweller knew they were borrowing. There were no legally tenable contracts, no other disclosures, no risk warnings—only the promise of glitter and the polite tyranny of social trust. A banker would call it a deposit, the jeweller called it tradition. Surprisingly, the regulators did not intervene. And everyone slept well. Yet every once in a while, there were incidents of jewellers running away with such public deposits, and shops shutting down.

Then, the future arrived—polite, digital, and slightly more dangerous. The same concept moved from ledger books to mobile screens, now marketed as “digital gold”. For as little as ten rupees, anyone could become an investor. A notification would pop up saying, Congratulations, you own 0.03 grams of gold!