What is the Gold Monetisation Scheme?

It is a gold savings account which will earn interest for the gold that you deposit in it. Your gold can be deposited in any physical form – jewellery, coins or bars. This gold will then earn interest based on gold weight and also the appreciation of the metal value.

How does gold monetisation scheme work?

  • Basic checks:

    It is important to check your gold’s purity and thankfully that can now be done through hallmarking centres. You can take your gold in any form to the hallmarking centre and they will assess the gold in front of you to provide you with a certificate on purity and gold content.

Related: Gold Purity and Color Guide
  • Gold savings account:

    This certificate can be deposited by you in the bank to open your Gold savings account. There will be Know Your Customer (KYC) formalities to open the account in the bank. On the deposited gold, bank will offer to pay you annual interest. You have to choose the cash/gold redemption option and tenure of your choice at the time of deposit itself.

  • Collect interest on your gold value:

    On completion of gold monetisation scheme tenure the bank will give 2% of interest calculated on the weight of your gold. For instance, if you deposit 100 gms of gold, at the end of the first year you can collect 102 gms of gold.

  • Tenure and minimum value:

    The minimum lock-in period for your gold is one year and you can deposit as little as 30g to open a gold savings account.

Why is gold monetisation scheme a good investment option?

There are many positives to depositing under the Gold monetisation scheme:

  • The gold monetisation scheme earns interest for your gold jewellery lying in your locker. Broken jewellery or jewellery that you don’t want to wear can earn interest for you in gold.
  • Coins and bars can earn interest apart from the appreciation of value.
  • Your gold will be securely maintained by the bank.
  • Redemption is possible in physical gold or rupees hence giving your gold purchase further earning opportunity.
  • Earnings from Gold monetisation scheme are exempt from capital gains tax, wealth tax and income tax. There will be no capital gains tax on the appreciation in the value of gold deposited, or on the interest you make from it.

How to redeem gold after scheme tenure is over?

At the end of the tenure, you can choose to take physical possession of the gold or opt for rupees for the amount of gold on that day’s price. Either way, you have to specify your preference in the beginning while opting for the scheme.

Why should I deposit my gold in the first place?

Gold lying in the locker appreciates in value if gold price goes up but it doesn’t pay you a regular interest or dividend. On the contrary, you incur carrying costs on it (bank locker charges). The gold monetisation scheme will allow you to earn some regular interest on your gold and save you carrying costs as well.

Explore more gold investment options here