Gold is a cherished commodity for women. It is an indicator of luxury and is often passed down the family line and holds great cultural significance as well. But this idle gold can be put to productive use by monetizing it. To help people do so, the Government of India launched the Gold Monetization Scheme in 2015 to help mobilize the country’s idol gold held in households, institutions, corporations, and Temple trust to make it easier to use for productive purposes and lessen the companies dependency on gold imports. 

 

This article takes you step-by-step through the understanding of the scheme, its features, eligibility criteria and guides you on how to avail the benefits of the scheme. 

 

About Gold Monetization Scheme 

 

The scheme was launched by the government of India on 5 November 2015 to encourage individuals, households, and institutions to earn returns on their gold investments without selling their precious jewelry or commodity. It allows depositors to earn interest payments on the metal that they otherwise kept locked in safes through their metal accounts. 

 

Objectives of Gold Monetization Scheme 

 

The objective of gold monetization scheme is: 

• To mobilize the gold in country’s household
• Reduce the gold imports on domestic demand 
• Enhance the gold and jewelry sector by providing gold loans from banks 
• Provide depositors a quality certificate to spread awareness about the quality, quantity, and purity of the gold

 

Gold Deposits Types under Gold Monetization Scheme 

There are two types of gold deposits under the gold monetization scheme: 

• Short-term Bank Deposit (STBD): The short term gold deposit scheme allows deposition of gold for a short duration ranging between 1 and 3 years. This deposited gold is used to meet the temporary gold demand of jewelers and at the end of the deposit tenure the depositor receives back their gold in the form of a gold bar or coin along with 2.25 interest percentage added to it. 
• Medium-and Long-term Government Deposit(MLTGD): the medium and long term gold deposit plan allows deposition tenure of 5 to 7 years for medium term and of 12 to 15 years for long term gold deposits. This gold is utilized to meet the country’s demand of domestic gold including jewelry and other purposes. At the end of tenure the depositors are eligible to receive gold at an interest percentage of 2.5% and the interest percentage is subject to periodic revisions by the government. 

 

Gold Monetization Scheme Features

Gold monetization scheme has several features that attract investments from gold owners: 

• Since there is a flexibility of tenure ranging from 1 to 15 years, individuals have an option of choosing according to their feasibility the duration of their investment. 
• Gold monetization scheme is a tax efficient investment because the interest and from this deposit is exempted from any income tax.
• Keeping your Gold locked in safes might tarnish it and lead to safety and security risks however the safety and security for depositors provided by the government of India is optimal. 
• It is very difficult to liquidate your gold. However gold deposited under the scheme is eligible for easy conversion into cash at the end of deposit tenure.

 

Gold Monetization Scheme Benefits

There are a number of benefits to depositors and the economy under the gold monetization scheme: 

• Idle gold in households is mobilized and brings down the countries demand of Gold import 
• The scheme allows efficient use of countries gold resources 
• India’s domestically sourced gold reduces its depends on imported gold which balances the country’s trade
• The scheme gives an opportunity to individuals to utilize there commodity for earning a revenue 

 

Gold Monetization Scheme Eligibility

 

Any resident of India either an individual, Hindu undivided families, trusts, and charitable institutions are eligible under the scheme. Non resident Indians (NRIs) are not eligible to avail the benefits of the scheme. An individual or institution may deposit their gold in the form of jewelry, coins, bars, or any other form. But their commodity would be subject to verification testing by an authorized Bank before deposition.

 

How to avail the benefits under Gold Monetization Scheme 

To avail the benefits under gold monetization scheme, an individual has to follow the following steps: 

• Visit an authorized Bank that offers the gold monetization scheme 
• Deposit your Gold in the form of jewelry, coins, bars, or any other form.
• The weight purity and other relevant information of your commodity is tested at the bank 
• After determining the purity of the gold, the bank will determine its exact value 
• Choose your desired deposition option based on your tenure preference 
• On deposition of your Gold, you will receive a certificate mentioning the necessary details including the quantity, price, tenure, and application interest rate of your commodity
• At the end of your deposition tenure, you have to take your certificate with you to the bank and in return you can redeem your Gold back in the form of gold bars or gold coins along with the interest earned
• You also have an option of liquidating your Gold in return of cash at the time of redemption 

 

Conclusion 

The gold monetization scheme is a valuable initiative of the Government of India to mobilize the idle gold in the country. The scheme has innumerable benefits for individual depositors and greatly impacts the economy by reducing the import of gold together to the domestic demand thereby breaking a proper trade balance. A participating depositor has various benefits under the scheme because it reduces the security issues and allows them to earn designated returns. 

The flexibility, safety, and exemption from tax on returns mix it into a very lucrative scheme for depositors to invest in. If you are somebody who’s looking to monetize their gold commodities, the gold monetization scheme can be your perfect hault.