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WHAT IS GOLD MONETISATION SCHEME?

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

Short-term gold deposit (1-3 years)
Medium-term gold deposit (5-7 years)
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

Premature redemption under gold monetisation payable only in rupees: RBI
'Any premature redemption of Medium and Long Term Government Deposit (MLTGD) would be only in Indian rupee'| August 05, 2022, Friday
Govt seeks industry suggestions to improve Gold Monetisation Scheme
In 2015, the government had launched the Gold Monetisation Scheme to mobilise the yellow metal held by households and ...| December 18, 2019, Wednesday
Towards a sensible gold policy
The industry should not be overregulated in the name of developing it or curbing black money| November 07, 2019, Thursday
Now, banks can directly buy gold from depositors for monetisation plan
With relaxation, one can also deposit with refiners and purity testing centres| August 16, 2019, Friday
Second phase of gold reforms on govt's priority list, revamped GMS on cards
The government is also considering making gold as an asset class, a source said| May 26, 2019, Sunday
Glitter back for gold monetisation scheme; banks to open metal account
If gold deposited upon maturity is returned in a cash equivalent, many temples would stay away from depositing gold| January 10, 2019, Thursday
Govt may announce changes in gold monetisation scheme in next few days
The country's largest lender, State Bank of India, is expected to be asked to identify at least 10 branches for this| November 05, 2018, Monday
Incentivise banks to promote gold monetisation: India Gold Policy Centre
With the Government of India's (GoI) Gold Monetization Policy yet to taste real success in triggering increased circulation of ...| January 22, 2018, Monday
Immediately pay interest on gold under GMS: RBI to banks
Gold can be deposited under GMS with a designated bank in the account of the Central govt| October 17, 2017, Tuesday
Efforts on to revive Gold Monetisation Scheme
Options being discussed over reluctance of banks and loans from GMS deposits| September 14, 2017, Thursday