Gold Monetization Scheme 2015: Interest, Investment Limit, Open Account

Indian’s are amongst the world’s biggest consumers of gold. They invest mostly in the physical form. However gold investors keep this precious metal unused. They either keep it safe in a bank locker or at home which ultimately loses its monetary value since it does not generate income unless it is sold at a higher price. Keeping this in mind, Prime Minister Shri Narendra Modi will launch four gold related investment schemes on 05 November, 2015:

  1. Gold Monetization Scheme
  2. Gold Coin Scheme
  3. Sovereign Gold Bond
  4. Gold Bullion Scheme

Let’s explore gold monetization scheme in detail which will earn interest on the idle gold:

Benefits to Investor: Gold deposited will earn interest.

Benefits to the Indian economy: Another benefit of this scheme is that India’s need of importing the gold will be reduced. This will strengthen India’s economy as expense on importing the gold will be reduced because the deposited gold will be re-circulated which will directly cut the import.

What type of gold can be deposited: Individual’s can deposit gold bars, coins, and jewelleries. However if the jewelry has embedded stones then it cannot be deposited.

Tenure: Investors are offered following three types of deposits or tenure options as a part of this gold monetization scheme:

  1. Short term tenure: Matures between 1-3 years
  2. Medium term tenure: Matures between 5-7 years
  3. Long term tenure: Matures between 12-15 years

Interest Rate: RBI has allowed banks to fix their own interest rate similar to the savings bank interest rate. The short term deposits will fetch 2.25 per cent interest on current price of gold while the long term investment would fetch 2.5 per cent interest.

Minimum Investment Limit: Gold which weighs 30 grams of 995 fineness is mandatory.

Maximum Investment Limit: There is no maximum limit for depositing under this scheme.

Who will verify the authenticity of the gold? To prevent fraudulent activity, each and every gold product will be tested by collection and purity testing centres. Government of India will provide the list of authorized centers.


Who can deposit under gold monetization scheme? Residents of India, Hindu undivided family, mutual funds and exchange trading funds registered under securities and exchange board of India (SEBI) can deposit under GMS.

Is joint deposit allowed? Yes. And to avoid complexing the deposit process, the rules applicable to the joint account holders in a normal bank account also applies to the GMS scheme. Minimum 2 persons are required for joint deposit and there is no cap on maximum person.

Where can you deposit? Reserve Bank of India has allowed all the scheduled commercial banks to offer the scheme.

Is premature withdrawal possible? Yes, but only after the minimum lock-in period.

Is there any penalty when deposits are withdrawn prematurely? Yes and it would be fixed by the respective bank.

Is the interest taxable? Yes, interest earned on the gold deposit is taxable as per the Income tax act, 1961.

What is the process of deposit?

Interested individual’s has to open gold deposit account which would be similar to a normal saving bank account. This would be a zero balance account. Are you aware of Pradhan Mantri Jan Dhan Yojana where you can open zero balance savings account? Read more.

  1. Documents required for account opening: All the documents for verification i.e. know your customer (KYC) would be required i.e. address proof, ID proof and passport size photograph. If more documents are required then the same would be asked by the respective banks.
  2. Once verification is done, depositor will have to approach the government authorized Collection and Purity Testing Centres (CPTC). Banks will provide this list to the depositor.
  3. CPTC will then perform a detailed assessment of the gold and upon successful verification they will issue a receipt which is signed by the authorized signatories of their center.
  4. Depositor will then have to submit the receipt in the bank. They will issue a final deposit certificate to the depositor which will also contain the tenure for which the deposit is made.
  5. How will the principal and interest get credited? It will be credited in the deposit account of the individual.
  6. Grievance Redressal: If individual’s are not happy with the bank with regards to any process involved in this scheme then they should first approach the bank’s grievance department and then contact banking ombudsman of Reserve Bank of India.

PM’s motto is to “Not let your gold become dead money”.  PM had earlier launched following successful schemes:

And with the launch of these new investment schemes, it is expected to further benefit Indian citizens.

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