Indians love gold. People’s love on gold is unmeasurable. Especially in our southern states, the demand for the gold is a bit high. Most of the Indian families have the habit of buying gold with their hard-earned money.
Most likely, this gold will be stored either at home or in bank lockers. But in case if you earn some money from the gold that is lying idle at home, then, you can also deposit it in Central Government scheme and earn some nominal amount.
In this post, Let’s about Gold Monetisation Scheme.
1. What is Gold Monetization Scheme?
Indian households maintains a lot of Gold. Everyone knows this. Gold is considered as a valuable Asset by the Indians.
However, the Central Government has decided to use such gold which is not used in Indian households as a Productive Asset. For this purpose, the Central Government has launched the Gold Monetization Scheme (GMS) to encourage people to deposit their unused gold with the Government.
2. Why Gold Monetization Scheme introduced ?
The Gold Monetisation scheme 2015, launched by Prime Minister Narendra Modi to convert unused gold in Indian households into a productive asset and also mobilise such gold and bring it into the Banking System.
With this initiative, the dependency on Imported gold will be reduced and it enhances the productive use of the gold reserves in India.
This Gold Monetisation scheme was introduced in 2015-16 budget and the Central government announced the discontinuation of the existing schemes of Gold Deposit Scheme 1999 and the Gold Metal Loan Scheme 1998.
3. What are the Conditions for Gold Monetization Scheme ?
In this scheme, Gold in the form of
1. Gold bars,
2. Coins and
3. Jewellery excluding Stones and other metals will be accepted.
4. Gold Monetisation scheme Minimum Deposit
How much Gold one can deposit under this scheme?
Under Gold Monetisation scheme, the Minimum deposit is 10 grams of gold. There is No maximum limit and you can deposit gold for a period upto 15 years.
Under this scheme, you won’t get much interest but it is better if you have intention to get some money from idle gold rested at home. This might be little benefit.
5. How Long I can hold Gold & How much I can Earn ?
People who deposit in Gold can choose any term between 1 to 15 years. There are different terms available in this scheme.
| Deposit Type | Tenure Period |
| Short Term Bank Deposit (STBD) | 1 to 3 years |
| Mid Term Government Deposit (MTGD) | 5 to 7 years |
| Long Term Government Deposit (LTGD) | 12 to 15 years |
6. Gold Monetisation scheme Interest rate
Gold Monetisation scheme Interest rate
You can earn the Simple interest on the deposited gold Annually or if you want the compound interest then you have to take the interest only for the maturity time. So, the interest amount you earn will be paid to you in cash also select this option before you deposit the goal.
The interest you receive will be depends on the period of time you deposit the gold which is given below [gold monetization scheme interest rate].
The Gold Monetisation scheme SBI was given below for the better understanding
| Deposit Type | Tenure Period | Rate of Interest (p.a.) |
| Short Term | 0-1 years | 0.50% per annum |
| Short Term | 1-2 years | 0.55% per annum |
| Short Term | 2-3 years | 0.60% per annum |
| Medium Term | 2.25% per annum | |
| Long Term | 2.50% per annum |
Through the Gold Monetization Scheme, individuals can receive the equivalent value of gold or cash. Depositors can choose to deposit their gold or cash at the time of maturity. However, the value of the gold you deposit does not determine your choice. Banks can provide coins or bullion in any form during the maturity period.
Under this scheme, Interest will be paid in cash only not in Gold.
My Analysis
This scheme brought by the Central Government with a good intention but most of the Indians want to invest or deposit their gold if the government offers attractive interest rates. Then only, people will be interested to deposit their Gold. However, the rate of interest offering by the government even for a period of 12-15 years is not even a Nominal Interest.
Also Read: 22 Carat Gold vs 24 Carat Gold
7. Benefits of the Gold Monetization Scheme
As you see, the Indian Gems and Jewellery industry is expected to see significant growth with the stable gold market in the country. You can earn from gold only if you store it in banks or lockers. However, with the Gold Monetization Scheme, you can also receive returns on your gold deposits, both in cash and gold.
8. How my Gold will be Stored ?
This scheme offers secure storage options. You do not have to worry about where to store your gold or pay charges for storing it. Once you make a deposit in this scheme, your gold will be secured with the bank.
9. Is there any Tax I should Pay ?
Your Gold deposits not only earn Interest but also exempt from Capital Gains Tax. Therefore, No tax is levied on the interest earned from these deposits.
10. Gold Monetisation Scheme Banks list
As per the guidelines of RBI, All Scheduled Commercial Banks are eligible to implement this scheme but the Regional Rural Banks (RRB) are not eligible to implement it.
Few of the popular bank names are listed below which allow Gold Monetisation Scheme is as follows
| S.No. | Bank Name |
| 1. | Bank of Baroda |
| 2. | ICICI Bank |
| 3. | State Bank of India |
| 4. | HDFC Bank |
| 5. | Punjab National Bank |
| 6. | Union Bank of India |
| 7. | Axis Bank |
| 8. | Indian Overseas Bank |
11. Who are Eligible for the Gold Monetization Scheme?
According to the directive given by the Reserve Bank of India, those who have registered below are eligible for the Gold Monetization Scheme.
- Individuals, singly or jointly (as Former or Survivor)
- Proprietorship & Partnership firms.
- HUFs
- Private institutions
- Companies
- Trusts (Mutual funds registered under SEBI, Exchanged Traded Funds)
- Charitable trusts
- Central and state governments
Two individuals or more people can contribute deposits to this scheme, while banks will credit the interest earned on joint deposits to the investors’ joint deposit accounts.
12. What is the process of Gold Monetization Scheme?
1. You need to go to the official Gold Purity Testing Center (PTC) near you. PTC will test the gold you deposit and issue a Certificate determining its value.
2. You can then submit this PTC certificate to your preferred bank and can deposit the gold.
3. If you don’t have a Savings account in that bank, then, they will create one with the same value as the gold mentioned in the certificate.
4. Depending on the tenure you choose, the bank will pay you interest for the gold you have deposited.
13. Frequently Asked Question [FAQ]
1. Gold Monetisation Scheme Launch date
The Gold Monetisation scheme launched by Prime Minister Narendra Modi in the year 2015.
2. Gold Monetisation scheme HDFC bank
HDFC Bank also offers the Gold Monetisation Scheme with Medium and Long term schemes with interest upto 2.25% p.a along with Lock in period of 5 Years.
3. Gold Monetisation Scheme SBI
The India’s largest Public Bank SBI is also offers the Gold Monetisation Scheme with Small, Medium and Long term schemes with interest upto 2.25% p.a.
4. Gold Monetisation scheme Minimum Deposit
Under Gold Monetisation scheme, you should deposit a Minimum of 10 grams of gold.
Thanks for your time 🙂
