Modi would also like to convince Indians to open their family vaults, which hold an estimated 17,000 tons of gold in jewelry and other heirlooms.  But it will be much harder to convince Indian families, who sometimes have little faith in financial institutions, to break tradition and hand over gold passed down the generations.  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.  Read MoreRBI keeps benchmark lending rate unchanged at 7.5%  Under that scheme India's top lender the State Bank of India offers 0.75 percent to 1 percent and only 15 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, say they expect 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.  Rajendra Jadhav, executive officer of the Shri Saibaba Sansthan temple trust, said rates will also be key to his temple's decision. He declined to say how much gold the temple, dedicated to a 19th century saint, had in its vaults.  A successful gold monetization program could go a long way in helping India reduce its trade imbalance.  India raised the import duty on gold, the country's biggest non-essential 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 that fell to a four-month low last month before recovering. Lower gold prices will 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.  "There is going to be a lock-in period under the new gold monetizing scheme," said Sudheesh Nambiath, an analyst at precious metals consultancy GFMS. "Banks will have to replenish the stocks with imports later (if temples withdraw gold)."
Modi's government is planning to launch a scheme that would encourage temples to deposit their gold with banks in return for interest payments.