What is Gold Monetization Scheme and What are its benefits?

Gold has always been and will be an integral part of Indian households, especially for women. We inherit it, buy it during special occasions, and consider it a symbol of prosperity & security. But how often do we actually use it? Most of the time, we don’t wear out of fear as chain snatching or theft has increased, so, most of it remains locked away, doing nothing in there.

This is where the Gold Monetization Scheme (GMS) comes in! It allows women to put their idle gold to work by earning interest while keeping ownership intact. Think of it as an FD for gold! If you’ve ever wondered how to make your gold work for you, this scheme could be explored. In this blog, we’ll understand what is gold monetisation scheme? How gold monetization scheme works? What are the features & benefits.

What is Gold Monetization Scheme (GMS)?

The Gold Monetization Scheme was launched by the Government of India to help individuals and institutions earn interest on their idle gold. Under this scheme, people can deposit their gold in any form, be it jewelry, coins, or bars with designated banks and earn interest over time.

Instead of letting your gold sit idle in lockers, Gold Monetization Scheme enables gold owners to benefit financially while contributing to the country’s economy.

What are the Features of the Gold Monetization Scheme?

• Gold Deposit Options: Short-term (1-3 years), Medium-term (5-7 years), and Long-term (12-15 years). Refer to the below table for more details:

Sr. No.	Type of Deposit	Duration	Minimum Lock-in Period	Applicable Interest Rate	Periodicity of Interest Payment
i.	Short Term Bank Deposit (STBD)	1-3 years	As determined by banks	As determined by banks	As determined by banks
ii.	Medium Term Government Deposit (MTGD)	5-7 years	3 years	2.25% p.a.	Simple Interest annually or cumulative interest at time of maturity compounded annually.
iii.	Long Term Government Deposit (LTGD)	12-15 years	5 years	2.50% p.a.	Simple Interest annually or cumulative interest at time of maturity compounded annually.

Source: RBI FAQs

• Purity Check & Security: Banks assess the purity of gold before accepting deposits.
• Minimum & Maximum Deposit Amount: Minimum Amount: 10 grams of raw gold (bars, coins, jewellery excluding stones and other metals). Maximum Amount: No limit.
• Flexibility in Redemption: Depositors can choose to redeem their gold in cash or gold equivalent.
• Tax Benefits: There is no wealth or income tax on interest earned. Moreover, there will be no capital gains tax on the appreciation in the value of gold deposited.

Note: If you choose Gold Monetization Scheme for depositing your gold jewellery, then you won’t get your gold jewelry back in its original form under the Gold Monetization Scheme (GMS). Instead, you’ll receive the value of your gold in the form of cash or gold coins. As The jewellery is melted and converted into 995 fineness bars/coins.

So, before opting for the scheme, please go through all the terms and conditions of the scheme.

What are the Benefits of the Gold Monetization Scheme?

Earn Interest on Your Gold: Instead of storing gold for years without returns, GMS allows you to earn passive income from it.

Safety & Security: Depositing gold with banks is much safer than keeping it at home or in a locker.

Liquidity Without Selling: You can access your gold when needed, without having to sell it.

Tax-Free Earnings: The interest earned is exempt from income tax and capital gains tax.

Boost to the Economy: The scheme helps reduce India’s gold imports by utilizing domestically held gold.

Who is Eligible for the Scheme?

The scheme is open to:

• Resident Indians (Individuals & HUFs)
• Individuals (including women holding inherited or self-purchased gold)
• Trusts including Mutual Funds/Exchange Traded Funds registered under SEBI (Mutual Fund) Regulations and Companies) can make deposits under the scheme.

Even small amounts of gold (10 grams or more) can be deposited, making it accessible to many women who own limited gold assets.

How to Enroll in the Gold Monetization Scheme?

1. Visit a Bank: Approach a designated bank offering the scheme.
2. Purity Testing: Your gold will be assessed at an authorized testing center.
3. Deposit Gold: Once tested, deposit it in your preferred tenure.
4. Start Earning Interest: Interest accrues as per the deposit tenure and scheme guidelines.

For years, women have relied on gold as a means of financial security, but now there’s a way to grow that security! Instead of letting gold sit idle, you can make it work for you with the Gold Monetization Scheme. Whether you’re a working woman, a homemaker, or someone planning for future financial needs, this scheme ensures your gold isn’t just a prized possession but also a productive asset. 

However, parking your gold in the GMS Scheme is completely up to you and you should read all the terms and conditions of the bank offering it before making a final choice

So, the next time you open your locker and see all that unused gold, think beyond just storing it think about growing it!

However, buying physical gold/gold jewelry is a luxury as you have to pay various costs like GST, making & design charges, storage charges, etc. So, if you want to invest in gold, then invest smartly with a gold mutual fund where you don’t have to bear all of the above costs and most importantly you can start investing with as low as just Rs.100. So, check out the Lxme app- investment for women and look out for  Rs.100 Gold Fund which is well researched and curated by experts.

FAQs:

Further read:

• Best Saving Schemes for Women in India

• 10 Reasons to Invest in Equity Market

• Best Investment Options for a Girl Child – Secure Her Future