Gold Monetisation Scheme (GMS): A Comprehensive Guide

Gold has always held a special place in our hearts and homes, symbolizing wealth, security, and tradition. For centuries, people have invested in gold, be it in the form of jewelry, coins, or bars. However, much of this gold often remains idle, locked away in safes and bank lockers. Recognizing the potential of this dormant asset, the Government of India introduced the Gold Monetisation Scheme (GMS) in 2015. This initiative aims to mobilize gold held by households and institutions, making it productive for the economy and beneficial for the investors.

Understanding the Gold Monetisation Scheme (GMS)

The Gold Monetisation Scheme is designed to allow individuals and institutions to deposit their gold with authorized banks in return for interest payments. This gold can then be utilized by the banks and other entities for various purposes, such as lending to jewelers or creating gold-related financial products.

Key Features of GMS

1. Eligibility: The scheme is open to individuals, HUFs (Hindu Undivided Families), and institutions like trusts and mutual funds.
2. Types of Deposits:
   • Short-Term Bank Deposit (STBD): Tenure ranges from 1 to 3 years.
   • Medium-Term Government Deposit (MTGD): Tenure ranges from 5 to 7 years.
   • Long-Term Government Deposit (LTGD): Tenure ranges from 12 to 15 years.
3. Minimum Deposit: The minimum deposit required is 30 grams of raw gold in any form (bars, coins, jewelry).
4. Interest Rates: Interest rates vary based on the tenure and type of deposit. These rates are determined by the banks and the government.
5. Redemption: Depositors have the option to redeem their investment in either cash or gold. However, this is subject to the terms and conditions set by the respective bank or financial institution.

Benefits of the Gold Monetisation Scheme

1. Interest Earnings: Unlike physical gold, which does not generate any income, gold deposited under GMS earns interest, providing a steady return on your investment.
2. Security: Depositing gold under GMS ensures its safety. Banks provide secure storage, eliminating the risks associated with holding physical gold at home.
3. Liquidity: GMS provides liquidity options through interest earnings and redemption choices, making it easier to access funds when needed.
4. Economic Contribution: By participating in GMS, depositors contribute to the country’s economy. The mobilized gold can be used to meet the demand for gold in various sectors, reducing the need for gold imports.
5. Tax Benefits: Interest earned on deposits under GMS is exempt from capital gains tax, wealth tax, and income tax, making it a tax-efficient investment option.

How to Participate in GMS

1. Purity Verification: Visit a Collection and Purity Testing Centre (CPTC) to get your gold assessed for purity.
2. Opening a Gold Savings Account: Once the gold’s purity is verified, the CPTC issues a certificate. This certificate can be used to open a Gold Savings Account with an authorized bank.
3. Deposit Process: The verified gold is then deposited, and the corresponding weight in gold is credited to your account.
4. Interest Calculation: Interest is calculated based on the weight of the gold deposited and credited periodically.

Conclusion

The Gold Monetisation Scheme is a forward-thinking initiative that not only offers a secure and profitable way to manage idle gold but also supports the broader economic framework. By converting dormant gold into a productive asset, investors can enjoy returns while contributing to the nation’s growth. If you have gold lying idle, consider exploring the benefits of the Gold Monetisation Scheme and make your gold work for you and the economy.

Top FAQs

1. What is the Gold Monetisation Scheme (GMS)?

Answer: GMS is a government initiative that allows individuals and institutions to deposit their idle gold with authorized banks to earn interest and contribute to the economy.

2. Who can participate in the GMS?

Answer: Individuals, Hindu Undivided Families (HUFs), and institutions like trusts and mutual funds can participate in the scheme.

3. What types of gold can be deposited under GMS?

Answer: You can deposit raw gold in any form, including bars, coins, and jewelry, provided it meets the minimum purity requirement.

4. What is the minimum amount of gold required for deposit?

Answer: The minimum deposit required is 30 grams of raw gold.

5. What are the different types of deposits under GMS?

Answer: GMS offers three types of deposits:

• Short-Term Bank Deposit (STBD): 1 to 3 years
• Medium-Term Government Deposit (MTGD): 5 to 7 years
• Long-Term Government Deposit (LTGD): 12 to 15 years

6. How is the purity of gold verified?

Answer: The purity of gold is verified at a Collection and Purity Testing Centre (CPTC).

7. What interest rates are offered under GMS?

Answer: Interest rates vary based on the tenure and type of deposit. They are determined by the banks and the government.

8. How is interest calculated and paid?

Answer: Interest is calculated based on the weight of the gold deposited and is credited periodically to the depositor’s account.

9. Can I withdraw my gold before the maturity period?

Answer: Premature withdrawal is allowed for Medium-Term and Long-Term deposits, subject to penalty and terms set by the respective bank.

10. How can I redeem my deposit?

Answer: Depositors can redeem their investment in either cash or gold, subject to the terms and conditions set by the bank.

11. Are there any tax benefits associated with GMS?

Answer: Yes, interest earned on deposits under GMS is exempt from capital gains tax, wealth tax, and income tax.

12. What happens to the gold after it is deposited?

Answer: The mobilized gold is utilized by banks for various purposes, including lending to jewelers and creating gold-related financial products.

13. Is my deposited gold safe?

Answer: Yes, the gold deposited under GMS is stored securely by the banks, ensuring its safety.

14. What documents are required to participate in GMS?

Answer: You need identity proof, address proof, and the purity certificate issued by the CPTC to open a Gold Savings Account.

15. Can NRIs participate in the GMS?

Answer: No, currently, only resident Indians are eligible to participate in the scheme.

16. How is the interest paid on gold deposits?

Answer: Interest can be paid in the form of gold or cash, depending on the terms set by the bank.

17. What are the benefits of participating in GMS?

Answer: Benefits include earning interest on idle gold, safe storage, tax benefits, and contributing to the economy by reducing gold imports.

18. Where can I find a Collection and Purity Testing Centre (CPTC)?

Answer: CPTCs are listed by authorized banks and can be found on their respective websites or by contacting the banks directly.

19. What are the charges for purity testing and deposit processing?

Answer: Charges for purity testing and deposit processing vary by bank and CPTC. These charges are typically nominal and may be outlined on the bank’s website.

20. How can I get more information about GMS?

Answer: For more information, you can visit the official websites of participating banks, contact their customer service, or check the Reserve Bank of India’s website.