Gold Monetization Scheme
Polity & Governance
17th Jan, 2019
- The Reserve Bank of India has amended the regulations relating to eligibility criteria for making deposits under the gold monetisation scheme.
- Persons eligible to make a deposit - Resident Indians [Individuals, HUFs, Proprietorship & Partnership firms, Trusts including Mutual Funds/Exchange Traded Funds registered under SEBI (Mutual Fund) Regulations, Companies, charitable institutions, Central Government, State Government or any other entity owned by Central Government or State Government can make deposits under the scheme.
Gold Monetization Scheme
- Launched in 2015, the scheme is a new deposit tool to ensure mobilization of gold possessed by various families and institutions in India.
- It is expected that the scheme would turn gold into a productive asset in India as beneficiaries earn interest on unused gold lying idle in bank lockers.
- It is a modification of the earlier Gold Deposit Scheme (GDS) and Gold Metal Loan Scheme (GML), and it replaced the Gold Deposit Scheme, 1999.
- Deposits can be made by residents of India, HUFs’, mutual funds and exchange trading funds registered under SEBI. Joint deposits are allowed with a minimum of two holders with no cap on the maximum number.
Deposit allowed under Gold Monetization Scheme 2015
- The scheme allows an investor to deposit gold in Short Term Bank Deposits (1-3 yrs) and Medium (5-7 yrs) and Long Term Government Deposit (12-15 yrs).
- The Short Term Bank Deposit would be accepted by individual banks on their own account. But the Medium and Long Term Government Deposits would be accepted by banks on behalf of the Government of India based upon notification issued by the Reserve Bank of India.
Key features of Gold Monetization Scheme
- The scheme accepts a minimum deposit of 30gm of raw gold in the form of a bar, coin or jewellery.
- There is no maximum limit of investment under this scheme.
- The scheme allows premature withdrawal after a minimum lock-in period. However, it charges penalty for such withdrawals.
- All designated commercial banks are eligible to implement the Gold Monetization Scheme in India.
- The scheme would offer interest at 2.50% per year which is higher than previous rates offered on gold investments.
- The short term deposits offered by Gold Monetization Scheme can be redeemed in either gold or in rupees at current rates applicable at the time of redemption.