Gold Monetization Scheme


The objectives of the Gold Monetization scheme are:

i) To mobilize the gold held by households and institutions in the country.

ii) To provide a fillip to the gems and jewellery sector in the country by making gold available as raw material on loan from the banks.

iii) To be able to reduce reliance on import of gold over time to meet the domestic demand.


The tenure of the deposit will be minimum 1 year and with a roll out in multiples of one year. Like a fixed deposit, breaking of lock-in period will be allowed.


1) Tax Exemption: In the Gold Deposit Scheme (1999), the customers received exemption from Capital Gains Tax, Wealth tax and Income Tax. Similar tax exemptions are likely to be made available to the customers in the GMS after due examination.

2) Interest in Gold: The bank will commit to paying an interest to the customer which will be payable after 30/60 days of opening of the Gold Savings Account. The amount of interest rate to be given is proposed to be left to the banks to decide. Both principal and interest to be paid to the depositors of gold, will be ‘valued’ in gold. For example if a customer deposits 100 gms of gold and gets 1 per cent interest, then, on maturity he has a credit of 101 gms.

Gold Monetization Scheme

Lending the Gold to the Jewellers

Gold Loan Account: The jewellers, on the basis of the terms and conditions of the banks, will get a Gold Loan Account opened at the bank.

Delivery of gold to jewellers: When a gold loan is sanctioned, the jewellers will receive physical delivery of gold from the refiners. The banks will in turn make the requisite entry in the jewellers’ Gold Loan Account.

Interest received by banks: Interest rate paid to the depositors of gold The interest rate charged by the banks will have to cover the following:

  • Fee paid to the refiners and Purity Verification Centres.
  • Profit margin of the banks
  • The banks can directly get gold from the international market on a consignment basis and lend it to the jewellers. If this route is more lucrative, then the entire purpose will get defeated. Thus, this aspect will also have to be kept in mind, while deciding the interest rate.

Download Gold Monetization Scheme

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