It seems the only way to stop Indians from buying more gold is to take their money away.

Prime Minister Narendra Modi’s government spent 16 months trying to persuade Indians to deposit their jewelry in the bank to earn interest, in an effort to curb soaring imports of the precious metal. But the program has only lured a tiny fraction of the $900 billion of gold that families and temples are estimated to have stashed away. On the other hand, Modi’s controversial decision to withdraw all high-value banknotes did the job instead.

Coupled with a higher import tax, the abolition of 86 percent of the nation’s banknotes in an anti-corruption drive helped push gold imports down 39 percent last year to 558 metric tons. Overall consumption in India tumbled to 676 tons, the lowest since 2009, according to the World Gold Council.

That’s bought Modi some breathing space to persuade Indians to recycle their gold in a country where jewelry plays an important role in weddings and festivals and is handed down to daughters for their own weddings.

“We Indians don’t like to sell our gold,” said Samsher Aliyar, a 29-year-old Mumbai cab driver. “My grandmother’s generation and even my parents aren’t going to deposit their gold with the banks as they consider it a part of their children’s inheritance. In a worst case scenario, we would take a loan on it.”

Modi set up the plan in November 2015 to try to curb India’s massive annual imports of the precious metal that were contributing to a record high current-account deficit and a slump in the rupee. But so far it’s only lured about 6 tons in the past year out of the 24,000 tons the World Gold Council estimates is locked away in India’s houses and temples.

“The government tried, but the people are not coming forward,” Devendra Kumar Pant, chief economist at India Ratings & Research Pvt., the local unit of Fitch Ratings, said by phone from New Delhi. The government is under less pressure to fix it because “the position right now on the current-account side is relatively comfortable.”

If the gold deposit system is going to work, banks and refiners need to improve awareness of the system and make it easier for customers to use, said Rajesh Khosla, managing director of the country’s biggest bullion refiner, MMTC-Pamp India Pvt. Ltd., and a member of the industry committee that the government consulted when defining the plan.

Purity Test

Under Modi’s plan, holders hand over that jewelry, or at least part of it, to a bank in return for interest payments on the value of the precious metal and a promise to return the equivalent amount of gold or cash at the end of the loan term.

The customer first has to take the jewelry to an independent assay office nominated by the bank to verify its purity. The bank then sends the gold to a refiner before finding a buyer for the resulting bullion. At the moment, there are only about 440 assayers and 10 refiners across the country approved by the Bureau of Indian Standards.

The complexity of the process, shortage of registered assayers and the risk to the lender in holding the metal have all damped banks’ enthusiasm for the program.

“Nobody is willing to take paternity of the scheme so it has become an orphan, and orphans always gets neglected,” said Khosla. “Somebody should take ownership of it. The government needs to crack the whip with banks.”

The government is exploring ways to promote the plan, D. S. Malik, a spokesman for the Finance Ministry, said by phone from New Delhi without providing further details.

‘Tedious Business’

The lenders face challenges in terms of safeguarding the collateral and leveraging it, said Harish Galipelli, head of commodities and currencies at Inditrade Derivatives & Commodities Ltd., by phone from Hyderabad. “The handling of physical gold is a tedious business.”

The decline in India’s gold imports has removed a potential pillar of support from global prices. Bullion for immediate delivery is down about 12 percent from its high in July and traded at $1,201.71 an ounce in London on Wednesday. Concerns over rising U.S. interest rates as the American economy picks up have also pressured prices.

Because banks haven’t promoted the plan actively, many citizens aren’t even aware of the product, with the bulk of the gold deposited coming from temples, Khosla said. Financial disclosure remains another deterrent as Indians fear being questioned by the income tax department about the source of the gold being deposited, he said.

Archana Veerbahu was among those who were unaware of the opportunity. Even after learning the details, the 30-year old Mumbai-based marketing consultant said the interest rates were too low to make it worth her while. “If I have more gold, I’d rather keep it in the locker as it’s easy liquidity any time.”

Gold Bonds

The nation’s largest bank, the State Bank of India, offers interest of 2.5 percent per annum for a deposit of 12-15 years, down to as low as 0.5 percent for maturity between 1-3 years. It’s taken in a little over 2.5 tons so far, said Prashant Upadhyay, deputy general manager of the precious metals department.

In contrast, the government’s sovereign gold bonds, which allow an investor to buy a bond priced at the value of gold without an underlying physical asset, have sold the equivalent of about 14 tons as of November, according to the finance ministry.

This isn’t the first time India offered an interest rate for gold deposits. A similar plan run by the SBI since 1999 lured just 8 tons, according to the bank. That program required investors to deposit a minimum 500 grams as opposed to 30 grams under the new system.

The damping effect of Modi’s banknote withdrawal may not hold back the tide of gold imports for long and the banks will need to improve the deposit system if it’s to have a meaningful effect. Demand in the world’s second-biggest gold market this year is forecast to be between 650 tons to 750 tons.

It will take time for refineries, assayers and banks to develop the system, and they need to make it easier to use and build trust with customers, the World Gold Council said in a report in January. Once the infrastructure is in place, the council predicts as much as 25 tons could be monetized within two to three years.