In a country like India, where gold holds emotional, cultural, and financial significance, most households possess this precious metal in various forms, often locked away in safes and lockers. The Gold Monetisation Scheme offers a way to make this dormant asset productive. Launched by the Government of India in 2015, this scheme empowers individuals and institutions to earn interest on their unused gold while contributing to the nation’s economic health by reducing the reliance on gold imports.
For those seeking a secure, interest-earning, and tax-efficient way to put their idle gold to work, the Gold Monetisation Scheme emerges as a thoughtful and impactful financial choice. This article explores all the critical aspects of the scheme: its working, eligibility, features, interest rates, and benefits, so readers can take informed action.
What Is the Gold Monetisation Scheme?
The Gold Monetisation Scheme (GMS) was launched to mobilise gold held by households, religious trusts, and other institutions. The goal is simple yet transformative, convert idle gold into a productive financial asset that earns interest and helps reduce India’s gold imports.
It merges earlier schemes like the Gold Deposit Scheme (1999) and Gold Metal Loan Scheme, offering more robust benefits under a single umbrella. Depositors can now earn returns on gold, held safely in banks, rather than keeping it idle at home.
Under the Gold Monetisation Scheme, gold is deposited in a designated bank account, where its purity is verified and certified. In return, the depositor receives a certificate, and interest is paid either in gold or cash equivalent. With flexible tenure options and tax exemptions, this scheme adds real value to sentimental assets.
How Does the Gold Monetisation Scheme Work?
The working of the Gold Monetisation Scheme is simple yet effective. It functions much like a savings bank account—but instead of currency, gold is the principal deposit.
Once a depositor submits their gold to a certified Collection and Purity Testing Centre (CPTC), its purity is tested and melted (with the depositor’s consent). Upon verification, a deposit certificate is issued. This certificate becomes the key to earning interest over the chosen deposit period.
Three types of deposit schemes are available under GMS:
| Deposit Type | Tenure | Interest | Lock-In Period |
|---|---|---|---|
| Short-Term Gold Deposit (STGD) | 1–3 years | Bank’s discretion | 1 year (approx.) |
| Medium-Term Gold Deposit (MTGD) | 5–7 years | 2.25% p.a. | 3 years |
| Long-Term Gold Deposit (LTGD) | 12–15 years | 2.50% p.a. | 5 years |
From individual savers to corporate institutions, the scheme provides a structured, interest-bearing account that aligns tradition with modern banking.
Eligibility and Types of Depositors for GMS
The Gold Monetisation Scheme is not restricted to a particular class of depositors. The Reserve Bank of India has made the scheme inclusive and accessible. The following are eligible depositors
- Individuals
- Hindu Undivided Families (HUFs)
- Proprietorship and Partnership Firms
- Companies and Trusts
- Mutual Funds and ETFs registered with SEBI
- Charitable Institutions
- Central and State Government entities
Joint deposits are allowed under the scheme, with both depositors earning interest proportionally. Whether it’s a homemaker saving for her daughter’s wedding or a temple trust preserving donated gold, GMS creates value for all.
Features of the Gold Monetisation Scheme
The Gold Monetisation Scheme is designed to be flexible and user-friendly. It brings multiple features that align with the financial needs of diverse stakeholders.
| Feature | Details |
|---|---|
| Minimum Deposit | 10 grams of raw gold |
| Maximum Deposit | No upper limit |
| Gold Accepted | Coins, bars, jewellery (excluding embedded stones/metals) |
| Nomination Facility | Available |
| Mode of Interest Payment | In gold or INR equivalent |
| Repayment | Principal in gold or INR; interest in INR |
The scheme ensures gold is not returned in the exact same form. Instead, it could be repaid as bullion or coin. This makes the process seamless for banks and keeps the value intact for depositors.
GMS Interest Rates and Repayment Mechanism
Interest is the most attractive part of the Gold Monetisation Scheme. Unlike lockers that incur fees, this scheme allows the depositor to earn while storing their gold securely.
| Deposit Type | Interest Rate |
|---|---|
| STGD | Bank’s discretion |
| MTGD | 2.25% p.a. |
| LTGD | 2.50% p.a. |
Interest is calculated based on the weight and purity of gold. The value of gold may increase over time, and GMS allows depositors to benefit from this appreciation.
How to Invest in the Gold Monetisation Scheme?
Investing in the Gold Monetisation Scheme is a well-structured process designed to be hassle-free for the depositor.
- Bank Selection: Choose a bank offering GMS (SBI, ICICI Bank, HDFC, PNB, etc.)
- Account Creation: Existing customers can apply directly; new customers must open an account
- Application Submission: Fill out the GMS form at the designated branch
- Purity Testing: Visit a Collection and Purity Testing Centre (CPTC) with the form
- Melting and Certification: Gold is melted and certified; deposit certificate issued
- Confirmation: Receive e-certificate of deposit via email or courier
The whole process is transparent and safe. Government-certified CPTCs ensure trust in every step.
Benefits of the Gold Monetisation Scheme
The Gold Monetisation Scheme offers a host of financial and practical benefits:
- Earn on Idle Gold: Rather than letting gold sit idle in lockers, earn interest by depositing it under GMS. It’s a passive income source with zero maintenance.
- Storage and Safety: Gold stored under GMS is secure and insured by the bank, relieving the owner of safety concerns or locker fees.
- Tax Benefits: Interest and maturity proceeds are exempt from capital gains tax, income tax, and wealth tax—making it a highly tax-efficient investment.
- Nation-Building Role: By depositing gold, one contributes to reducing gold imports, saving foreign exchange and strengthening India’s economy.
- No Maximum Limit: Whether 20 grams or 20 kilograms, the scheme accommodates all sizes of deposits, encouraging both small savers and large institutions.
Changes in the GMS Scheme from 26 March 2025
Due to evolving market conditions, the Government of India has discontinued the Medium-Term Gold Deposit (MTGD) and Long-Term Gold Deposit (LTGD) under the Gold Monetisation Scheme from 26 March 2025. However, banks will continue offering Short-Term Gold Deposit (STGD) under GMS.
This strategic change aligns the scheme with current investment trends while retaining its core benefits for short-term investors.
Premature Withdrawal Under GMS
Though the Gold Monetisation Scheme comes with lock-in periods, it allows for premature withdrawals under defined conditions:
For STGD: Premature redemption allowed in gold or INR, at the bank’s discretion
For MTGD and LTGD: Redemption only in INR. Interest payable is adjusted as per tenure completed
| Actual Deposit Period | Interest Reduction |
|---|---|
| MTGD (3–5 years) | 0.375% less than applicable rate |
| MTGD (5–7 years) | 0.25% less than applicable rate |
| LTGD (5–7 years) | 0.25% less than applicable rate |
| LTGD (7–12 years) | 0.375% less than applicable rate |
| LTGD (12–15 years) | 0.25% less than applicable rate |
The scheme ensures flexibility while maintaining long-term security.
Banks Offering Gold Monetisation Scheme
The following is a list of major banks through which one can participate in the Gold Monetisation Scheme:
- State Bank of India (SBI)
- ICICI Bank
- HDFC Bank
- Punjab National Bank (PNB)
- Bank of Baroda
- Indian Overseas Bank
|
Also Check: |
|
| Pradhan Mantri Kaushal Vikas Yojana | Pradhan Mantri Jan Dhan Yojana |
Gold Monetisation Scheme FAQs
Who can invest in the Gold Monetisation Scheme?
Any individual, HUF, trust, company, or institution can deposit gold under this scheme.
Can jewellery with stones or metals be deposited under GMS?
No, only raw gold like coins, bars, or plain jewellery is accepted.
Is the interest earned under GMS taxable?
No, the interest and maturity proceeds are exempt from income tax.
