Gold has been a cherished asset for generations, often passed down as a sign of affluence. In India, gold holds cultural significance and is a preferred investment option for many. To put this idle gold to productive use and to reduce dependency on imports, the Indian government introduced the gold monetization scheme in 2015.
The scheme aims to mobilize the vast amount of gold lying idle in households and institutions and channel it into the banking system. This article provides an in-depth understanding of the gold monetization scheme, its types, features, eligibility, and the step-by-step process to avail the scheme.
Gold monetization scheme is a government initiative designed to encourage individuals, households, and institutions to deposit their idle gold holdings with authorized banks. Under the scheme, the deposited gold is put to productive use by lending it to jewelers, and in turn, the depositors earn interest on their gold holdings.
The scheme offers an attractive alternative to keeping gold idle in lockers or safes and allows individuals to earn returns on their gold investments without selling the precious metal.
The gold monetization scheme offers two types of gold deposits: short-term bank deposit (STBD) and medium-long term government deposit (MLTGD).
Short-term Bank Deposit (STBD):
This deposit option allows individuals to deposit gold for a short duration, ranging from one to three years. The gold deposited is utilized to meet the temporary gold demand of jewelers. At the end of the deposit tenure, depositors receive their gold back in the form of gold bars or coins, along with accrued interest. The interest rates for STBD are determined by the banks and may vary based on the deposit tenure.
Medium- and Long-Term Government Deposit (MLTGD):
Under this option, individuals can deposit gold for a medium to long term, with tenure options of 5 to 7 years and 12 to 15 years. The gold deposited in MLTGD is utilized to meet the country’s domestic gold requirements, including gold for jewelry and other purposes. The interest rates for MLTGD are fixed by the government and are subject to periodic revisions.
The gold monetization scheme comes with several attractive features that make it a lucrative investment option for gold owners:
The scheme offers flexibility in deposit tenures, ranging from one to 15 years, allowing individuals to choose the most suitable option based on their financial goals and requirements.
Tax Benefits
The interest earned on the gold deposits is exempt from income tax thereby turning it into a tax-efficient investment avenue.
Safety and Security
The gold deposits under the scheme are backed by the Government of India, ensuring a high level of safety and security for depositors’ gold holdings.
Liquidity
Unlike physical gold, which may take time to liquidate, the gold deposited under the scheme can be easily converted into cash at the end of the deposit tenure.
The gold monetization scheme offers a range of benefits for both individual depositors and the economy as a whole. Here are the key ones:
Efficient Use of Gold
By channeling idle gold into the banking system, the scheme ensures the efficient use of the country’s gold resources and reduces reliance on imported gold.
Reduced Imports
With an increased supply of domestically sourced gold, the scheme helps reduce India’s dependence on importing gold, which can positively impact the country’s trade balance.Chennai Investment
Earning Returns on Gold
Instead of keeping gold locked away in lockers, depositors can earn interest on their gold holdings, effectively allowing their gold to work for them.
Supporting the Jewelry IndustryJaipur Investment
The gold deposited under the scheme is utilized to meet the gold demand of jewelers, ensuring a steady supply of gold for the jewelry industry.
The gold monetization scheme is open to all resident individuals, Hindu Undivided Families (HUFs), trusts, and charitable institutions in India. Non-resident Indians (NRIs) are not eligible to participate in the scheme. Individuals can deposit gold in the form of jewelry, coins, bars, or any other form, subject to verification and testing by the authorized bank.
The process of availing the gold monetization scheme is straightforward and involves the following steps:
Visit an Authorized Bank
Individuals interested in participating in the scheme should visit any of the authorized banks that offer the gold monetization scheme.
Deposit Gold
Provide the details of the gold to be deposited, including its form (jewelry, coins, bars, etc.), weight, purity, and other relevant information.Varanasi Investment
Verification and Testing
The bank will verify the details of the gold and conduct purity testing to determine its exact value.
Choose Deposit Option
Select the desired deposit option – STBD or MLTGD —based on the preferred deposit tenure.
Issue Deposit Certificate
Once the gold is deposited, the bank will issue a gold deposit certificate, providing all the necessary details, including the deposit tenure and the applicable interest rate.Lucknow Stock
Interest
Throughout the deposit tenure, depositors will earn interest on their gold holdings at the agreed-upon rates.
Redemption
At the end of the deposit tenure, depositors can select redemption of their gold in the form of gold bars or coins, along with the interest earned.
The gold monetization scheme is a valuable initiative by the Indian government to put the vast amount of idle gold to productive use and reduce the country’s dependency on imported gold. The scheme offers numerous benefits to individual depositors, the jewelry industry, and the economy as a whole. By participating in the scheme, individuals can earn returns on their gold investments and contribute to the country’s economic growth.
New Delhi Wealth Management
