Gold Monetisation Scheme (GMS) {स्वर्ण मुद्रीकरण योजना}

Updated on Jul 04, 2020

The gold monetisation scheme is the gold savings scheme. Generally, people keep their gold at their home, or they can store it in bank lockers by paying a maintenance fee. But rather than that, you can keep your gold in any form in a gold monetisation scheme account and earn interest as the price of the gold rise up. The gold monetisation scheme is the new one that was introduced by the Government in 2015-2016.

Objective

The main aim of the gold monetisation scheme is to protect the gold held in Indian households as well as put it to productive use. The most significant objective is to cut down the country's gold imports by reducing domestic demand. By the way, India is the second-largest consumer of gold after China.

Features

The gold monetisation scheme is the best place to hold your gold. Let us discuss the features of gold monetisation scheme:-

Secure storage of your gold

The primary trend among Indians is to deposit their gold in storage lockers in banks and take it out for family functions or weddings or to sell it off. Although, you have to pay an annual fee to the bank for the storage locker. You are spending money to keep your gold safe. Gold monetisation scheme provides security to your gold by not only storing it but also returning it to you in the form of money or physical gold when the plan acquires maturity.

Utility for your gold

If you keep unutilized or old gold in a safe deposit locker in your house or a bank, then it doesn't give you any benefit, and your gold is idle. Moreover, you sell off the gold. You only earn spot money. But, if you are depositing your gold in gold monetisation scheme, you will get you interest money. But, you also have the option of en-cashing the gold at maturity level. You will get more advantage of the appreciating value of gold.

Flexibility in deposits

You can deposit your gold in any form under the gold monetisation scheme. You could put in coins, gold bars, and jewellery. Although gold jewellery crusted with gemstones cannot be deposited in this scheme. 

You will be able to find the official RBI Notification about GMS here.

Convenient Tenures

There are three-term deposit plans available under the gold monetisation scheme:-

  • Short term: 1 to 3 years
  • Medium-term: 5 to 7 years
  • Long term: 12 to 15 years

In case, if you need to withdraw the deposit before the end of the tenure, then you need to pay a small penalty.

Benefits of Gold monetisation Scheme

Earn interest

Gold lying in your bank lockers doesn't earn you anything. Even, when you keep your gold in a bank locker, then it costs you charge bank locker to keep it safe. This scheme will help to earn interest on gold deposits that will increase your savings.

Enjoy tax benefit

The main advantage of the gold monetisation scheme is that the earnings from the gold monetisation scheme are exempted from capital tax gain, income tax, and wealth tax. Moreover, your gold value also appreciates then capital gain tax will not be levied on it.

Mobilize idle gold

Gold monetisation scheme will help in mobilizing the available gold which has been lying on the houses or banks. The movement of gold in the national market will gain benefit the Indian gems and jewellery sector, which is the significant contribution to India's exports.

Avail secured storage

when you open a gold deposit account in the bank, then it will reduce your tension regarding the storage of the gold. Once you give your possessions of gold, then your bank will keep it secure. 

Get flexibility on redemption

The gold depositor has the option to take either cash or gold on redemption. Although, the redemption preference has to be mentioned at the time of deposit.

Frequently Asked Questions

Q: Can a deposit under Gold monetisation Scheme be made for four years or eight years?

No, however, a short term deposit to begin with made for three years could be rolled over for another year. The roll overcapacity is not available for medium and long term deposits.

Q: Is it compulsory to complete the KYC for potential clients of gold monetisation scheme before depositing gold?

Yes, unless the probable depositor is already a bank's KYC obedient customer.

Q: In what form the depositor can get back his gold at maturity?

If the depositor opts for liberation in the form of gold, he will be able to get back physical gold at maturity in the way of bullion.

Q: Who determines the rate of interest on the Medium as well as Long Term Deposits?

The rate of interest on the Medium as well as Long Term Deposits will be determined by the Central Government and advised to banks by RBI.

Q: Will any designated bank can get any commission for servicing the MLTGD product?

Yes, the designated bank can get any commission for servicing the MLTGD product.

Q: Is it compulsory for banks to take part in the auction of gold collected under the Medium and Long Term Deposit schemes?

No, banks don't need to take part in the auction of gold collected under the Medium and Long Term Deposit schemes.

Q: Can a designated bank purchase or borrow gold from local banks as well as refiners to refill the GMS gold at maturity.

Yes, designated bank purchase or borrow gold from local banks as well as refiners to refill the GMS gold at maturity.

Q: Can banks evade their gold exposures that are arising from the operation of GMS?

Yes, in international markets.


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WRITTEN BYVarsha Verma

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