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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
- 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
Gold loan market expected to shift to organised sector: WGC report
The government has earned over Rs 3,400 crore from disposal of enemy properties, mostly movable assets like shares and gold, officials said
'Any premature redemption of Medium and Long Term Government Deposit (MLTGD) would be only in Indian rupee'
In 2015, the government had launched the Gold Monetisation Scheme to mobilise the yellow metal held by households and institutions in the country
The industry should not be overregulated in the name of developing it or curbing black money
With relaxation, one can also deposit with refiners and purity testing centres
The government is also considering making gold as an asset class, a source said
If gold deposited upon maturity is returned in a cash equivalent, many temples would stay away from depositing gold
The country's largest lender, State Bank of India, is expected to be asked to identify at least 10 branches for this
The paper quotes a nation-wide survey-based study of 1,171 households as well as an interview-based study of senior management of six banks, five gold refiners and one industry consultant
Gold can be deposited under GMS with a designated bank in the account of the Central govt
Options being discussed over reluctance of banks and loans from GMS deposits
Scheme intends to mobilise idle gold held by households so that wealth can be put to productive use
IGPC interviewed top bank officials, refineries to grasp challenges of the policy and implications
People do not have cash to buy gold in rural areas, while urban consumers are in holiday mood
5.7 tonnes collected under gold monetisation scheme
The proposal to auction gold was discussed in a meeting recently by commerce and finance ministries, sources said
The temple recently deposited 1,311 kg pure gold bars with Punjab National bank under new Gold Monetisation Scheme
Banks still lukewarm; changes needed in norms for jewellers and refinery margins, among others
Look at gold bonds or gold monetisation scheme instead of buying physical gold