written by | May 10, 2022

Gold Monetisation Scheme: How to Earn Income From Your Gold?

Is your gold sitting idle at home or in your bank locker? Have you thought of putting your gold to some good use? Then think no more; the gold monetisation scheme (GMS) is for you. The gold monetisation scheme was first launched in the year 2015 in November. This was launched mainly to encourage people to put the gold kept at home or in bank lockers to good use. This scheme is made for people who want to earn interest on unused gold. 

Did you know?

During the year 2021, India has imported 1067.72 tons of gold. The gold import is up by approximately 27.66% compared to the previous year in 2019.

Gold Monetisation Scheme

A gold monetisation scheme is a scheme where you can deposit your gold and get an interest upto 2.5%. This scheme is beneficial if you are looking for gold as an investment, and this scheme helps you keep your gold safe and away from spending more on locker charges. The government revamped and linked the gold deposit and gold metal loan schemes through the gold monetisation schemes. It also provides interest and security to the unused gold. This scheme also allows the investor to save on the gold storage cost.

This scheme also gives you tax exemption, and the amount of gold deposited in the GMS will be tax exempted. The gold monetisation scheme was implemented to help the country reduce gold imports in the longer run. Eight months after this scheme was launched in June 2016, the government did collect approximately 3.1 tonnes of gold. However, the main contribution here came from temples rather than households.  

In February 2021, the government revamped the scheme to make this even better, allowing the banks to come together with the large jewellers as the BIS certified gold collection centres. This was to encourage more gold from the domestic to come out and enter the gold monetisation scheme

Also Read: What is the Sovereign Gold Bond Scheme?

How much Deposit is Allowed Under the Gold Monetisation Scheme?

It's just like a fixed deposit; an investor can deposit their gold for a short, medium or long time. The short term deposit is called a short term bank deposit (STBD). The medium and long term deposit is called medium or long term government deposit (MLTGD). Short term bank deposit's tenure is from 1 to 3 years, whereas medium and long term government deposit's tenure is from 5 to 7 years and 12 to 15 years, respectively. 

For short term bank deposits, it will be directly accepted by the bank itself, but for the medium and long term deposits, it would be accepted by the banks but on behalf of the government of India. This is due to the notification issued by the Reserve Bank of India.

Benefits of Gold Monetisation Scheme

Investors can make their deposits of gold which is sitting idle, which provides them safety and interest earning. With this scheme, investors can cut the cost of gold storage while benefiting from the interest given to it. Gold can be deposited as jewellery, gold coins or bars. You will have two options to choose from at the time of redemption, and you can take it back in the form of gold or cash. 

When it comes to earning interest on the gold deposited, you can earn up to 2.5% interest on the gold deposited, depending on the tenure. 

One of the main reasons people haven't opted for this scheme is that the gold holds sentimental value. People want it returned in the same form as given. To check the purity of the gold given, it will be melted down if a gold bangle or necklace is given. The gold will not be returned in the same form as given during the redemption time.

Below are a few of the benefits of choosing the gold monetisation scheme:

  • The minimum gold weight for a deposit is just 30 grams.
  • You can withdraw the deposit whenever you want. It gives you good flexibility.
  • You can earn an interest of 2.5% per annum rather than keeping the gold in the bank locker and paying for the same.
  • There's a tax exemption for the gold deposited.

Eligibility for the Gold Monetisation Scheme

All the people who are residing in India can apply to this scheme.

Features of the Gold Monetisation Scheme

  • There's no maximum cap for this scheme. An investor can invest how much gold he wants under this scheme.
  • This scheme only accepts a minimum of 30 grams of gold as an investment. Lesser weight than this will not be taken. It can be in the form of jewellery or a bar or coin.
  • You can withdraw the amount of gold prematurely, but these kinds of withdrawals must be paid with a penalty.
  • This scheme offers an interest rate of upto 2.5% per annum.
  • The deposits can be redeemed in gold or cash during maturity.
  • All the banks offer gold monetisation schemes in India.

How to Apply for a Gold Monetisation Scheme?

  • Anyone eligible can apply to the gold monetisation scheme by heading to any private or public banks or applying online after meeting the KYC norms.
  • Fill out the gold monetisation scheme application form at the bank. You will have to visit any of the nearest collection and purity testing centres (CPTC) with a copy of your application form within 7 days.
  • Give the gold for the melting process and take the deposit receipt from CPTC with the quantity of the gold deposited as well as the purity. They'll also inform the bank about the same.
  • Investors will receive the deposit certificate through the courier and in digital form to your email ID. This will have all the details of the weight of the gold deposited, purity of the gold and the scheme details.
  • You will start getting interested as soon as the CPTC gives the deposited gold bars to the bank or 30 days after you get the receipt from CPTC, whichever is the earliest.

Also Read: Top 10 Gold Loan Companies in India

Is the Gold Monetisation Scheme for You?

For the people who have stored gold for future use, like for your son's or daughter's wedding, this will be a good scheme for you. Or, if you buy gold just for investment, then this scheme is for you. You can earn a 2.5% interest rate in this scheme, and GMS is a safer option than keeping the gold in bank safety lockers and then paying for the same. You can earn as well as your gold is safe with this scheme.


After its launch in November 2015, the gold monetisation scheme has shown significant growth. In 2021 the gold procured stood at around ₹20,277 crores, and it is 5 times higher when compared to the previous year, the financial year 2020.

In 2021, for the scheme to be more accessible to everyone, the government revamped this scheme. This encourages more banks and jewellers to participate in the scheme to make it accessible for everyone, everywhere in India. 

If you are looking for a great investment option with gold, go for this scheme. It provides you with the security you need to keep your gold safe and helps you earn something in the process. If you need money urgently, you can always go for early withdrawal. This not only keeps you away from the locker charges as well as provides security but also gives you tax benefits.
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Q: What minimum and maximum quantity of gold can be deposited in the gold monetisation scheme?


The minimum quantity of gold required to be deposited in the gold monetisation scheme is 30 grams. There's no maximum quantity cap on gold to be deposited in this scheme.

Q: Is it possible to have joint ownership under the gold monetisation scheme?


The gold monetisation scheme allows joint ownership of two or more depositors. The deposit will be credited to the joint deposit account opened in the name of these depositors.

Q: Can a depositor close the deposit before the minimum lock-in period?


In the case of STBD, it will be determined by the banks themselves. In the case of MTGD and LTGD deposits, premature closure before the lock-in period is possible only when the depositor's death or loan default is taken over the MLTGD certificate.

Q: Who determines the interest rate in the medium to long term gold deposits made in this scheme?


It is usually determined by the central government, advised by the Reserve Bank of India.

Q: Is it mandatory to complete KYC for the gold monetisation scheme?


Yes, it's mandatory to complete your KYC before depositing the gold.

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