What is Gold Monetisation Scheme?

Gold Monetisation Scheme

What is Gold Monetisation Scheme?
What is Gold Monetisation Scheme?

The gold monetisation scheme was launched in 2015 by the government with an aim to mobilise gold and facilitate its use for productive purposes, which further in the long run will also help in reducing India's dependability on gold imports. India is the second largest importer of gold. The movement of the gold scheme will ease the government's burden to bear the cost of borrowing and will also supplement the RBI's gold reserve.

Gold Monetisation Scheme explained 

The Gold Monetisation Scheme or GMS modifies the existing Gold Deposit Scheme or Gold Metal Loan Scheme. Investors can make term deposits of their idle gold under GMS, which provides them safety and interest earnings that will help them to save storage costs and still benefit them with returns from deposits.

Gold, under the scheme, can be deposited in any form - bars, coins or jewellery, and the depositor also has the option to either take cash or gold on redemption. The investor at the time of redemption will not get the gold in the same form as they had put it. Investors can only encash the deposit in the form of money, bars or gold coins.

Benefits of gold monetisation scheme

  • Easy and safe storage: The scheme offers safe storage of the investors' gold and unlike bank lockers don't charge for the deposits' safekeeping. Instead the investor gets guaranteed returns and can redeem the deposit in gold or money at the time of maturity.
  • Mobilising gold: One of GMS' goals is not only to make existing schemes more effective, but broaden the scope for mobilising gold held by households and putting them into productive use. The mobilising of gold in the national market will also help the gems and jewellery industry, which is seen as a major contributor to India's exports.
  • Tax benefits: Earnings from the GMS scheme are exempted from the capital gains tax. This is also extended if the investors' gold value appreciates and also not levied on the interest gains.
  • Attractive interest rates: The scheme allows customers to deposit their idle gold holdings for a fixed period in return for interest in the range of 2.25-2.50 per cent.

Types of Gold Monetisation Scheme

  1. Short-term gold deposit (1-3 years)
  2. Medium-term gold deposit (5-7 years)
  3. Long-term gold deposit (7-12 years)

During launch, the scheme only facilitated accounts for individuals (in the form of joint or single). However, in 2019, RBI revised the holding norms and also included charitable institutions and the central government in it. The RBI notification said that any entity owned by the central or the state government could avail the scheme.

Latest Updates on Gold Monetisation Scheme

Only 21 tonnes mobilised under gold monetisation scheme in 8 years

3 min read Last Updated : Jul 12 2023 | 8:51 PM IST
Government monetised enemy properties worth Rs 3,400 crore, says official

3 min read Last Updated : Feb 21 2023 | 11:02 AM IST
Premature redemption under gold monetisation payable only in rupees: RBI

2 min read Last Updated : Aug 05 2022 | 01:40 AM IST
Govt seeks industry suggestions to improve Gold Monetisation Scheme

3 min read Last Updated : Dec 18 2019 | 11:34 PM IST
Towards a sensible gold policy

6 min read Last Updated : Nov 07 2019 | 11:57 PM IST
Now, banks can directly buy gold from depositors for monetisation plan

3 min read Last Updated : Nov 07 2019 | 07:49 AM IST
Second phase of gold reforms on govt's priority list, revamped GMS on cards

4 min read Last Updated : May 26 2019 | 12:33 PM IST
Immediately pay interest on gold under GMS: RBI to banks

Last Updated : Oct 17 2017 | 8:07 PM IST
Efforts on to revive Gold Monetisation Scheme

Last Updated : Sep 14 2017 | 01:41 AM IST
Sovereign gold bonds worth 14 tonnes in six tranches

Last Updated : Nov 18 2016 | 10:48 PM IST
MMTC to auction gold collected under monetisation scheme

Last Updated : Jul 07 2016 | 4:49 PM IST
Why is the gold monetisation scheme not taking off?

Last Updated : May 17 2016 | 12:07 PM IST
Akshay Tritiya: Have your cake and eat it too

Last Updated : May 08 2016 | 11:16 PM IST