Gold Monetisation Scheme –Replace Both Gold Deposit and Gold Metal Loan Schemes – Gold Monetisation Scheme ,What is gold monetisation scheme?

Gold Monetisation Scheme

  • In the Union Budget Speech of 2015-16, an announcement was made and it was proposed to introduce a Gold Monetization Scheme.
  • Gold Monetization scheme  will replace both the present Gold Deposit and Gold Metal Loan Schemes.
  • The new scheme will allow the depositors of gold to earn interest in their metal accounts and the jewelers to obtain loans in their metal account.
  • Banks/other dealers would also be able to monetize this gold.
  • Loan against gold for various agricultural purposes is a loan product where owner of the gold can avail loan against it.
  • On the other hand, in Gold Monetization Scheme the owner will earn income on the deposited gold.
  • As these are diverse products, there seems no material impact on the existing loan against gold product of banks due to introduction of the Gold Monetization Scheme.

What is gold monetisation scheme?

It is a scheme that facilitates the depositors of gold to earn interest on their metal accounts. Once the gold is deposited in metal account, it will start earning interest on the same.

How it generally works?

When a customer brings in gold to the counter of specified agency or bank, the purity of gold is determined and exact quantity of gold is credited in the metal account. Customers may be asked to complete KYC (know-your-customer) process. The deposited gold will be lent by banks to jewellers at an interest rate little higher than the interest paid to customer.

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How is the interest rate calculated?

Both principal and interest to be paid to the depositors of gold, will be ‘valued’ in gold. For example if a customer deposits 100 gm of gold and gets one per cent interest, then, on maturity he has a credit of 101 gram.

The interest rate is decided by the banks concerned.

What is the tenure?

The tenure of gold deposits is likely to be for a minimum of one year. The minimum quantity of deposits is pegged at 30 gram to encourage even small deposits. The gold can be in any form, bullion or jewellery.

How the redemption takes place?

Customer will have the choice to take cash or gold on redemption, but the preference has to be stated at the time of deposit.

Mr. Jaitley also announced that the Government shall commence work on developing an Indian Gold Coin, which will carry the Ashok Chakra on its face. Such an Indian Gold Coin would help reduce the demand for coins minted outside Indian, and also help to recycle the gold available in the country.

The Finance Minister also announced the development of an alternate financial asset, a Sovereign Gold Bond, as an alternative to purchasing metal gold. The bonds would carry a fixed rate of interest, and also be redeemable in terms of the face value of the gold, at the time of redemption by the holder of the bond.


  • Gold Deposit Scheme (GDS) is in the nature of a fixed deposit in gold.
  • The customers can deposit their idle gold under GDS which will provide them safety, interest earnings, tax benefits and a lot more.
  • Purpose of the Gold deposit Scheme is To mobilize the idle gold in the country and put it into productive use.
  • To provide the customers an opportunity to earn interest income on their idle gold holdings.
  • Any Resident Indian of the following categories: Individuals, singly or jointly (as Former or Survivor) , HUFs , Trusts , Companies Are Eligible for this Scheme.
  • Deposits may be made available within a maturity range from three to seven years.


  • Metal (Gold) Loans to Domestic Jewellery Industry
  • Metal (Gold) Loans to Jewellery  Exporters
  • Gold metal loan Scheme is to provide loan to Jewellery Industry and Exporters of Jewellery.
  • Under this scheme a borrower can take loan on gold .
  • it is the responsibility of bank to carry out proper credit appraisal of the borrowers.