Gold Monetization Scheme. The Gold Monetization Scheme was launched on 5th November, 2015 by the Prime Minister Narenda Modi. The monetisation scheme will allow you to earn some regular interest on your gold and save you carrying costs as well. Under the amended norms, gold deposits made by depositors in the STBD scheme for a period of 1-3 years would accrue interest in gold units.
(1). The Union Finance Minister Arun Jaitley announced several steps for monetizing gold in the Budget 2015-16 speech, one of them being Gold Monetization Scheme (GMS).
(2).As per the Budget speech the stocks of gold in India were estimated to be over 20,000 tonnes but most of this gold is neither traded nor monetized
(3).The Gold Monetization Scheme will replace the already existing Gold Deposit and Gold Metal Loan Schemes.
(4). Objectives of the Gold Monetization Scheme are as follows
To mobilize the gold held by households and institutions in the country.
To provide a push up to the gems and jewellery sector in the country by making gold available as raw. material on loan from the banks. To be able to reduce the dependency on import of gold over time to meet the domestic demand.
(5). Features of GMS are as follows
It facilitates the depositors of gold to earn interest on their metal accounts.
Once the gold is deposited in metal account, it will start earning interest on the same. The banks would also be able to monetize the gold under this scheme.
(6). When a customer takes gold to deposit in a specified bank or agency the purity of the gold is determined by a preliminary test which includes melting the gold and checking with the consent of the customer.
(7). A preliminary XRF machine test is also conducted to tell the customer the approximate amount of pure gold.
(8). If the customer agrees then he will have to fill a Know Your Customer (KYC) form to allow the melting of gold.
(9). A fire array test will be conducted and the gold will be melted in the presence of the customer to remove dirt or studs in the gold.
(10).The removed dirt or studs will be handed over to the customer and the purity of the gold will be informed. After which the customer will be given a choice if he/she is willing to deposit the gold or take it back
(11). If the customer is willing to deposit the gold in the metal account then he/she will be given a certificate by the Collection Center certifying the amount and purity of the deposited gold.
(12).The minimum quantity of gold that can be deposited by a customer is set as 30gms to encourage even small depositors
(13).The deposited gold will lent by the banks to jewelers at an interest rate little higher than the interest paid to the customers.
(14).Both the principal and interest to be paid to the depositors of gold will be valued in gold
(15).The tenure of gold deposits is likely to be for a minimum of 1 year. The customers will have a choice to take cash or gold on redemption as per the preference stated at the time of deposit.
Deposit allowed under Gold Monetization Scheme 2015
An investor can deposit gold for short, medium and long terms under the Gold Monetization Scheme. The scheme would allow an investor to deposit gold in Short Term Bank Deposits (SRBD) and Medium and Long Term Government Deposit (MLTGD). The tenure of a Short Term Bank Deposit is 1-3 years. The Medium and Long Term Government Deposits can be opened for 5 -7 years and 12-15 years respectively. The Short Term Bank Deposit would be accepted by individual banks on their own account. But the Medium and Long Term Government Deposits would be accepted by banks on behalf of the Government of India based upon notification issued by the Reserve Bank of India.
Gold Monetization Scheme Eligibility
All residents Indians can invest in this new Gold Monetization Scheme. 2015.
Key features of Gold Monetization Scheme
The Gold Monetization Scheme comes with the following features:
- The scheme accepts a minimum deposit of 30gm of raw gold in the form of a bar, coin or jewelry.
- There is no maximum limit of investment under this scheme.
- The scheme allows premature withdrawal after a minimum lock-in period. However, it charges penalty for such withdrawals.
- All designated commercial banks would be able to implement the Gold Monetization Scheme in India.
- The scheme would offer interest at 2.50% per year which is higher than previous rates offered on gold investments.
- The short term deposits offered by Gold Monetization Scheme can be redeemed in either gold or in rupees at current rates applicable at the time of redemption.
- Benefits of investing in Gold Monetization Scheme
By investing gold in the Gold Monetization Scheme 2015, an investor can enjoy the following benefits:
- You would earn interest on your idle gold which would add value to your savings.
- The scheme would benefit the country by reducing its gold import.
- The schemes offers flexibility. You can withdraw your investment/gold as and when you need it.
- You can start your investment with as low as 30gm of gold.
- A portion of the gold collected through the Gold Monetization Scheme can be sold or lent to MMTC and RBI for minting of gold coins and sale. Thus, the gold deposited through this scheme will be re-circulated in the country to help reduce gold imports. Gold being the most precious asset of the country, the Government of India aims to use it for the purpose of nation building and strengthen the country’s economy
Important - FAQs
Question. 1. Does Gold Monetization Scheme 2015 allow withdrawal of investments?
Yes, the scheme allows withdrawal of your investments. You can withdraw your gold after completing the minimum lock-in period.
Question. 2. What is the rate of interest offered by the Gold Monetization Scheme?
The rate of interest offered by the scheme ranges from 2.25% to 2.50% per year.
Question. 3. How many deposit schemes are available under the Gold Monetization Scheme?
Three deposits schemes are available under the Gold Monetization Scheme which include - Short Term Bank Deposits (SRBD) and Medium and Long Term Government Deposits (MLTGD).
Question. 4. What is the tenure of a Short Term Bank Deposits (SRBD)?
The tenure of a Short Term Bank Deposits is 1-3 years.
Question. 5. For how long can I invest in a Medium Deposit?
You can invest in a Medium Deposit for a period of 5 to 7 years.
Question. 6. Can I invest in a Long Term Deposits for 14 years?
Yes, you can invest in a Long Term Deposit for 14 years. The Gold Monetization Scheme offers Long Term Deposits for a period of 12 to 15 years.