Gold Monetisation Scheme

By Mayashree Acharya


Updated on: Dec 30th, 2021


6 min read

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The Government of India announced the Gold Monetisation Scheme (GMS) in September 2015. The government launched the gold monetisation scheme to solve the problem of gold being locked up inside bank lockers and enable the gold stock to make some money. Individuals and organisations can capitalise on their gold reserves through the GMS. 

The gold monetisation scheme comprises the previous ‘Gold Deposit Scheme’ and the ‘Gold Metal Loan’ scheme, revamped and linked together in the GMS. The objective of the GMS is to mobilise the gold held by institutions or households and facilitate its use for productive purposes, which in turn reduces the country’s reliance on the import of gold in the long run.

Investing in GMS is a good option for individuals and institutions as it keeps the gold safe. The GMS works like a savings bank account and saves the fees paid to bank lockers where the gold is kept for safety. Under the GMS, an individual/institution has the option to deposit gold in a gold savings account and earn interest on it. However, it must be noted that an individual cannot deposit gold jewellery having other metals or stones embedded in it.

Features of Gold Monetisation Scheme

  • The eligible persons can deposit gold in a bank savings account and receive interest on the gold deposited under the gold monetisation scheme. 
  • The tenure of the gold deposits can be short, medium and long under the GMS. The tenures are as follows:
    • Short tenure is when gold is invested for 1-3 years.
    • Medium tenure is when gold is invested for 5-7 years.
    • Long tenure is when gold is invested for 12-15 years.
  • The GMS interest rate for the deposit of gold is dependent on the investment tenure, which is as follows:
    • For short tenure (1 year) – 0.50% p.a
    • For short tenure (1-2 years) – 0.55% p.a
    • For short tenure (2-3 years) – 0.60% p.a
    • For medium tenure – 2.25% p.a.
    • For long tenure – 2.50% p.a. 
  • The interest earned under the GMS is paid either in gold or in money equivalent.
  • The GMS provides the option for repayment of the principal either in gold or cash equivalent to the value of gold on the date of deposit/investment maturity. However, the repayment of the deposited gold jewellery can be in a different form at the time of maturity, such as coin or bullion. The gold may not be given in the same form as deposited. 

Eligibility for Gold Monetisation Scheme

The Reserve Bank of India has stated the eligibility criteria for the gold monetisation scheme. The following are eligible to deposit gold in the GMS: 

  • Individuals. 
  • HUFs. 
  • Proprietorship. 
  • Partnership firms. 
  • Companies. 
  • Trusts, including exchange-traded funds and mutual funds registered under SEBI (Mutual Funds) Regulations. 
  • Charitable institutions. 
  • Central government, state governments or any other entity owned by central or state government. 

The RBI has also stated that two or more eligible owners can make joint deposits under the gold monetisation scheme. In the case of joint depositors, the bank will credit the interest to the joint deposit accounts opened together by the investors.

Process of Investing in Gold Monetisation Scheme

  • Visit the nearest located authorised gold Purity Testing Centre (PTC). 
  • The gold PTC will test the gold to be deposited and give the certificate about the value of the gold.
  • Visit the bank of your choice to deposit the gold and submit the gold PTC certificate obtained from the authorised PTC.
  • Open a savings account if you don’t have an account in the respective bank. The bank account will be opened equal to the value of the gold mentioned in the certificate.
  • The interest earned by the deposited gold will be credited to the account as per the rate for the tenure of your scheme.

Benefits of Investing Gold Monetisation Scheme

  • Gold storage with returns – The GMS provides an option to store gold safely at banks for a short, medium and long tenure and obtain interest on the gold deposit. The GMS gives an option to gain returns on the gold, which would otherwise lie still in the lockers.
  • Encashment of gold – The eligible persons/institutions can encash the value of gold when it appreciates by investing in GMS. Gold can be utilised in the best possible way through GMS. Investing gold under GMS increases the safety of gold and also lets the individual/institution make money from it.
  • Flexibility – There is no need for a specific form of gold to invest in the GMS. An individual/institution can invest gold coins, bars or jewellery. There is also no maximum limit of gold that can be invested under the GMS.
  • Tax benefits – One of the best features of the GMS is that there is no need to pay any tax on capital gains on the profits that an individual/institution makes under the scheme. Upon maturity of the GMS, the interest and maturity cash payments are exempt from income tax and wealth tax.
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About the Author

I am an advocate by profession and have a keen interest in writing. I write articles in various categories, from legal, business, personal finance, and investments to government schemes. I put words in a simplified manner and write easy-to-understand articles. Read more


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