Understanding the Gold Monetisation Scheme: Key Updates and Benefits
Transforming Idle Gold into Income
Gold typically serves as a mere asset in households, but through the Gold Monetisation Scheme (GMS), it can be converted into interest-earning deposits in certain cases. Understanding the current regulations is crucial, especially since significant changes were implemented in 2025.
What is the Gold Monetisation Scheme?
Launched by the government in 2015, the Gold Monetisation Scheme aims to integrate idle gold held by individuals and institutions into the financial system, thereby reducing the country's reliance on gold imports. Under this scheme, the purity of the gold is assessed at designated deposit centers, and a gold deposit is created based on the deposited gold.
Current Gold Deposit Options
A significant update is that as of March 26, 2025, the Medium Term and Long Term Government Deposits have been discontinued. This means that no new deposits will be accepted for these options. However, the Short-Term Bank Deposit (STBD) may continue at the discretion of banks.
Thus, if you come across information on social media or older articles regarding interest on 5-7 year or 12-15 year government gold deposits, it may not be applicable for new investments.
How is Interest Earned on Gold?
In the Short-Term Bank Deposit, the interest rate is determined by the bank itself. According to the government’s economic affairs department, this rate is set based on market conditions and other factors. Therefore, it is not necessary for all banks to offer the same interest rate.
Currently, SBI also indicates that it only accepts Short-Term Bank Deposits under its Gold Deposit options.
Benefits of Depositing Idle Gold
The primary advantage of depositing gold is that inactive gold stored at home or in lockers can be transformed into an interest-earning financial asset. The scheme aims to utilize such idle gold productively.
However, before depositing gold, it is essential to understand that the process involves checking and valuing the purity of the gold. Therefore, one should carefully consider the decision to deposit jewelry with emotional significance.
How Much Gold Can Be Deposited?
According to the RBI's FAQ, the GMS requires a minimum deposit of 10 grams of raw gold, with no maximum limit specified. This can include bars, coins, and jewelry, although stones and other metals in jewelry are removed.
Is it Better than Fixed Deposits?
It would not be accurate to say that the Gold Monetisation Scheme is superior to fixed deposits for everyone. The nature of both is different. In fixed deposits, you deposit money and earn interest on it, while in GMS, you deposit physical gold and receive returns based on applicable rules.
Therefore, when making an investment decision, factors such as interest rates, duration, potential changes in gold prices, tax regulations, and cash requirements should be considered.
Government's Consideration for Scheme Changes
Reports have emerged regarding the government's plans to promote the Gold Monetisation Scheme in new ways in 2026, potentially involving jewelers. The proposed changes aim to bring large reserves of gold stored in homes into the formal financial system. However, it is important to distinguish these proposals from the currently implemented regulations.
Conclusion
There is an option to turn idle gold at home into a source of income, but currently, the old 5-7 year and 12-15 year government deposits under GMS are closed for new investments. Therefore, it is crucial to verify the existing Gold Deposit facilities and interest rates with the relevant bank before investing.