Gold Monetization Scheme (GMS)
Last Updated : Nov. 4, 2022, 11:51 a.m.
Investing in gold is a solid strategy to diversify your holdings and safeguard your wealth. Gold is a material possession that has been proven to hold its worth over time. The Gold Monetisation Scheme could benefit the depositor and the RBI launched by our government in 2015. It is a secure and practical option for depositors to earn interest on their gold without selling it.
What is the Gold Monetisation Scheme?
The Gold Monetisation Scheme (GMS) was launched in 2015 by the government. The scheme aims at providing an avenue for citizens to deposit their gold in banks and earn interest on it. Over 500 tonnes of gold have already been deposited with the RBI through this arrangement, with the trust of the majority of the depositors.
This scheme offers some benefits regarding convenience, safety, and liquidity. For depositing your gold, an account is opened with a designated bank under the scheme and dominated in grams of gold.
Benefits of the Gold Monetisation Scheme
- No risk: The amount of risk pressure decreases as the gold is deposited in the bank lockers, which will be secured under the presence of the banks.
- Mobilisation of gold: Before depositing your gold in the bank account under the scheme it must have been an idle investment in your household. But now, after depositing it in the bank, the movement of the gold in the market will give a helping hand to the jewellery sector, which is the main contributor to India’s exports.
- Earn interest income: Keeping your gold idle for a longer term at your home won’t give you any bonus, even when the price of the gold increases. But when it is used to deposit in the scheme bank account, you could earn interest up to 2.5% P.A.
- Saving storage area: To keep your gold secure at your homes, you shall build up a locker for which a maintenance cost rises. But this scheme of depositing your gold in the designated bank could help you save your net earnings.
- Capital growth: The Gold Monetisation Scheme allows you to benefit from rising gold prices without incurring additional costs.
- Exempted from Tax: You shall be exempted when you deposit your gold in the bank under this scheme. In the Income Tax Act, the gold invested under the scheme is excluded.
- Reduces reliance on gold imports: Additionally, the gold that’s been mobilised will increase the gold reserves of the Reserve Bank of India (RBI). Furthermore, it will assist the government in lowering the cost of borrowing.
How to apply
To apply for the loan, the applicant must have a PAN card , valid ID proof, and a bank account. The loan amount will be deposited in the borrower’s account within 24 hours of the application being approved.
The gold monetisation scheme is a unique concept to realise and utilise the intrinsic value of gold, which would otherwise be lying idle in the form of ornaments, etc. This scheme knows how to turn your perennial gold hoards into instant wealth through gold investment . The rates promised can be as high as 25% per annum. It is a reverse loan process with which its customers will get money against the idle gold in their possession. This is a lucrative way to invest your gold. The GMS is worth considering.
Types of gold deposits
There will be three distinct gold deposit plans, as follows:
Short-term gold deposits: These deposits will be made with the designated banks for a short period.
a) The short period can be said as 1-3 years. The short-term deposits can be allowed for broken periods, for example; 1 year, three months; 2 years, four months, 15 days, etc.
b) Interest rate: The interest rates for these deposits can be at the bank’s discretion. That means the designated banks are free to fix the rates of interest. The interest shall be credited to the bank accounts and can be withdrawn annually on the 31st of march.
c) Minimum lock-in period: The same can also be under the bank’s discretion.
2. Medium-term gold deposits: These deposits have a period of 5-7 years and may be decided by the Central Government from time to time.
a) Deposits can be allowed for broken periods, for example; 5 years, seven months; 13 years, four months, 15 days, etc.
b) Interest rate: The rate of interest for these is 2.25% P.A. These interest rates will be decided by the Central Government and notified by RBI from time to time.
c) Minimum lock-in period: The lock-in period could be three years.
3. Long-term gold deposits: The deposits for a long term can be from 12-15 years period.
a) Interest rate: The current interest rates for long-term deposits are 2.50% P.A.
b) Minimum lock-in period: A long-term deposit can be withdrawn after five years.
Revamped Gold Deposit Scheme (R-GDS)
Revamped Gold Deposit Scheme can be termed a fixed deposit scheme. The depositor shall earn a fixed interest for a fixed period when he deposits their gold assets in the bank locker under this scheme.
Revamped Gold Metal Loan (GML) Scheme
The gold metal loan scheme is a new initiative launched by the government to help people in need of money. Under this scheme, people can borrow money against their gold jewellery. The scheme is interest-free. The scheme is open to all Indian citizens 18 years of age or above.
You have gone through the gold monetisation scheme and have learned all the aspects of it provided above. Ensure to make out the best use of it while availing of gold or related services.
