Monetization Scheme for Gold- Features and Benefits

The Monetization Scheme for Gold is a government initiative that encourages individuals to put their idle gold assets to productive use. Participants can deposit their gold in banks, earning interest on the deposited metal.

The scheme aims to reduce the country’s reliance on gold imports and mobilize existing gold for economic growth. With features like flexible tenure and tax benefits, it appeals to those looking for a secure and yield-generating option for their gold holdings.

Gold monetization scheme not only provides a safe storage solution for gold but also promotes financial inclusion by offering a convenient way for people to earn from their dormant gold assets.

What is Gold Monetization Scheme?

The gold monetization scheme is a government initiative in India aimed at mobilizing the country’s idle gold reserves. Launched to reduce dependency on gold imports, the scheme encourages individuals to deposit their gold with authorized banks in exchange for interest-bearing deposits.

By unlocking the value of idle gold, the scheme seeks to put the precious metal to productive use in the economy. Participants can opt for short-term, medium-term, or long-term deposits, providing flexibility in tenure.

This initiative not only provides individuals with a secure and interest-earning avenue for their gold holdings but also contributes to the nation’s economic stability by utilizing domestic gold resources more efficiently.

How Monetization Scheme for Gold Benefits You?

The monetization scheme for gold offers a host of benefits for individuals looking to make their gold assets work for them. By depositing idle gold with authorized banks, participants can earn interest on their holdings, turning a traditionally dormant asset into a source of financial growth.

This initiative not only provides a secure storage solution for gold but also presents a convenient and yield-generating avenue.

With flexible tenure options and potential tax benefits, the scheme caters to a diverse range of needs, offering participants a way to earn returns while contributing to the country’s economic stability by reducing reliance on gold imports.

Ultimately, the Monetization Scheme for Gold provides a tangible and beneficial avenue for individuals to maximize the value of their gold assets.

Deposit Types under Gold Monetization Scheme

Three types of deposits are offered for investors under gold monetization scheme:

  • Short Term Bank Deposit (STBD)
  • Medium Term Government Deposit (MTGD)
  • Long Term Government Deposit (LTGD)
 S. No. Deposit Type  Duration Minimum Lock in Period Interest Rates Periodicity of Interest Payment
1 Short Term Bank Deposit (STBD) 1to 3 Years Decided by Banks Decided by Banks Decided by Banks  
 

 

2

 

 

Medium Term Government Deposit (MTGD)

 

 

5 to 7 Years

 

 

3 Years

 

 

2.25 % Per Year

Yearly simple interest or compounded cumulative interest at maturity, compounded annually.
 

 

3

 

 

Long Term Government Deposit (LTGD) 

 

 

12 to 15 Years

 

 

5 Years 

 

 

2.50% Per Year

Yearly simple interest or compounded cumulative interest at maturity, compounded annually.

Also Read: SBI Annuity Deposit Scheme-Features & Eligibility

Short-term Bank Deposit (STBD)

The Short-term Bank Deposit (STBD) is a component of the Gold Monetization Scheme allowing participants to deposit their gold for a short duration, typically ranging from 1 to 3 years.

During this period, depositors earn interest @ 2.25% on their gold holdings, providing a flexible and liquid option for those seeking short-term financial gains without committing to a more extended tenure.

Medium Term (MTGD) and Long-Term Government Deposit (MLTGD)

The Medium- and Long-Term Government Deposit (MLTGD) is another category within the Gold Monetization Scheme that caters to individuals looking for a more extended commitment.

Participants can deposit their gold for medium-term (5-7 years), for which interest rate is 2.25% or long-term (12-15 years) durations, earning interest @ 2.50% throughout the deposit tenure. This option offers stability and sustained returns for those willing to commit their gold assets for an extended period.

Features of Gold Monetization Scheme

The Gold Monetization Scheme offers various appealing features, making it an attractive investment choice for gold owners these features include:

Safety and Security: The Gold Monetization Scheme boasts robust safety and security features, backed by the Government of India. This ensures a high level of protection for depositors’ gold holdings, instilling confidence in the safety of their investment.

Tax Benefits: One of the appealing features of the scheme is the exemption of income tax on the interest earned from gold deposits. This tax-efficient characteristic enhances the attractiveness of the monetization scheme for gold as an investment avenue.

Minimum Deposit: The scheme accommodates a minimum deposit of 10 grams of raw gold, whether in the form of bars, coins, or jewelry, making it accessible to a wide range of gold owners.

Deposit Limit: There is no maximum limit on investments under this scheme, providing flexibility for individuals with varying investment capacities.

Flexible Tenure: With deposit tenures ranging from one to 15 years, the scheme offers flexibility, allowing individuals to align their investment duration with their unique financial goals and requirements.

Liquidity: In contrast to physical gold, which may take time to liquidate, gold deposited under the scheme can be easily converted into cash at the end of the deposit tenure, offering enhanced liquidity.

Premature Withdrawal: The scheme allows for premature withdrawal after a minimum lock-in period, providing participants with a degree of flexibility in managing their investments.

Benefits of Gold Monetization Scheme

Safety: Storing gold at home poses inherent risks due to its high value, making it susceptible to theft or loss. The scheme provides a secure and cost-free alternative, safeguarding your gold holdings without additional expenses.

Capital Gains: Monetization scheme for gold allows you to benefit from the increased prices of gold, similar to physical gold, without incurring additional costs. As the price of gold is influenced by market forces, this scheme enables depositors to capitalize on capital appreciation.

Efficient Use of Gold: By channeling idle gold into the banking system, the scheme promotes the efficient use of the country’s gold resources, reducing reliance on imported gold.

Reduced Imports: The scheme contributes to a decrease in India’s reliance on imported gold by increasing the supply of domestically sourced gold. This has a positive impact on the country’s trade balance.

Save Storage Cost: Keeping idle gold at home accrues storage costs, such as maintenance charges for lockers. The monetization scheme eliminates these expenses, allowing depositors to save on storage costs associated with precious metals.

Earning Returns on Gold: Rather than keeping gold locked away, depositors can earn interest on their gold holdings through the scheme, making their gold assets work for them and generating returns.

Supporting the Jewellery Industry: Gold deposited under the scheme is utilized to meet the gold demand of jewellers, ensuring a consistent supply for the jewellery industry. This contributes to the sustainability and growth of the jewellery sector.

Who is Eligible for Gold Monetization Scheme?

All resident Indians are eligible to invest in the monetization of gold, introduced in 2015. The following entities can also avail the benefits of the scheme:

  • Individuals
  • Hindu Undivided Family (HUF)
  • Companies
  • Charitable institutions
  • Proprietorship and Partnership firms
  • Any trusts, including Mutual Funds or Exchange Traded Funds
  • Central Government
  • State Government
  • Other entities owned by the Central or State Government

Non-resident Indians (NRIs) are not allowed to participate in the scheme.

How to Subscribe for Gold Monetization Scheme?

Subscribing to monetization of gold scheme is straightforward process and involves the following steps:

  • Individuals interested in the scheme should go to any authorized bank offering the scheme.
  • Provide details about the gold to be deposited, including its form (jewellery, coins, bars, etc.), weight, purity, and other relevant information.
  • The bank will verify the gold details and conduct purity testing to determine its exact value.
  • The designated institution will carry out KYC of the investor.
  • Investor needs to select deposit option, either Short-term Bank Deposit (STBD) or Medium- and Long-Term Government Deposit (MLTGD), based on the desired deposit tenure.
  • After the gold is deposited, the bank will issue a gold deposit certificate, containing all necessary details, including the deposit tenure and applicable interest rate.
  • Upon reaching the end of the deposit tenure, depositors have the option to choose the redemption of their gold. This can be done in the form of either gold bars or coins, along with the interest earned during the deposit period.

Conclusion

The gold monetization scheme with its several features and benefits is considered a sound investment choice for various reasons. It provides a secure and interest-earning avenue for individuals owning idle gold, offering an alternative to traditional storage methods.

With the backing of the Government of India, the scheme ensures safety and reliability. Additionally, it contributes to the efficient use of the country’s gold resources, reducing dependence on imported gold.

The scheme’s flexibility, tax benefits, and potential for capital appreciation make it an attractive option for investors looking to make their gold holdings work for them while supporting the nation’s economic stability.

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