The Gold Monetisation Scheme (GMS) requires a minimum deposit of 30 grams of gold with a 995 fineness and no maximum limit, making it accessible to various gold holders.
Gold Monetisation Scheme Highlights
The Gold Monetisation Scheme (GMS) offers numerous benefits, from interest earnings to secure storage, making it a valuable option for gold holders. Here’s a quick overview:
| Feature | Description |
|---|---|
| Minimum Deposit | 30 grams of gold with 995 fineness, no maximum limit. |
| Interest Rates | Medium-term 2.25% p.a.; Long-term 2.50% p.a. |
| Deposit Tenure | Short-term (1–3 years), Medium-term (5–7 years), Long-term (12–15 years) |
| Tax Benefits | Exemption from capital gains and wealth tax; interest income is taxable. |
| Redemption Options | Redeem principal in gold or INR, interest paid in INR for medium and long-term deposits. |
| Secure Storage | Gold is stored in insured bank vaults with routine audits for maximum security. |
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Objectives of the Gold Monetisation Scheme
The scheme aims to mobilize idle gold across India, support economic growth, and reduce the country’s reliance on gold imports. Key objectives include:
- Utilize Idle Gold: GMS allows people to earn interest on gold that would otherwise sit unused.
- Secure and Insured Storage: Deposited gold is safely stored in insured bank vaults, minimizing the risks associated with home storage.
- Strengthen Banking Reserves: The scheme increases liquidity within the banking system, supporting financial growth.
- Reduce Trade Imbalance:By lowering the demand for imported gold, GMS improves India’s trade balance.
Types of Deposits for Gold Monetisation Scheme
The Gold Monetisation Scheme (GMS) offers flexibility with different deposit terms, enabling depositors to select an option that best aligns with their financial goals:
| Deposit Type | Tenure | Redemption Options |
|---|---|---|
| Short-Term Deposits (STBD) | 1–3 years | Principal and interest can be redeemed in either gold or INR, providing liquidity and flexibility. |
| Medium-Term Deposits (MTGD) | 5–7 years | Principal redeemable in gold or INR; interest paid in INR, offering stability with a moderate commitment. |
| Long-Term Deposits (LTGD) | 12–15 years | Principal redeemable in gold or INR; interest paid in INR, ideal for longer-term asset growth. |
Interest Rates of Gold Monetisation Scheme
Interest rates under the Gold Monetisation Scheme (GMS) are based on the chosen deposit tenure, with higher rates offered for long-term deposits:
| Tenure | Interest Rate (%) |
|---|---|
| Medium-term | 2.25% p.a |
| Long-term | 2.50% p.a. |
Note: Interest payments are made annually on March 31.
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Eligibility for Gold Monetisation Scheme
A wide range of individuals and entities are eligible to participate in the scheme. Below is a list of eligible depositors:
- Individuals: Single and joint account holders can participate and earn interest.
- Hindu Undivided Families (HUFs): Family units recognized under Indian law are eligible to deposit.
- Proprietorships and Partnership Firms: Independent businesses can deposit gold under the scheme.
- Companies: Corporate entities registered under the Companies Act can participate.
- Trusts and Charitable Institutions: Includes SEBI-registered trusts managing ETFs, mutual funds, and public welfare organizations.
- Government Entities: Central and state governments, along with state-owned entities, are eligible to participate.
Top Banks Offering Gold Monetisation Scheme
Banks provide a range of GMS services, including insured storage, interest options, and flexible redemption in gold or INR. Here’s a list of the top banks offering the Gold Monetisation Scheme (GMS) in India:
- State Bank of India (SBI)
- HDFC Bank
- ICICI Bank
- Punjab National Bank (PNB)
- Bank of Baroda
- Union Bank of India
- Indian Overseas Bank
Steps to Apply for Gold Monetisation Scheme
The application process is structured to ensure easy and secure deposits, involving a visit to both a designated bank branch and a Collection and Purity Testing Centre (CPTC).
- Visit a Designated Bank Branch: Existing account holders of participating banks (e.g., HDFC, SBI) can apply directly. New customers must open an account first.
- Fill the GMS Application Form: Complete the application form provided by the bank to initiate the process.
- Collection and Purity Testing Centre (CPTC): Bring the application copy to the nearest CPTC within seven days for verification.
- Gold Verification and Testing: The CPTC will verify the gold’s purity by melting it. Upon completion, a receipt with the gold’s weight and purity will be issued.
- Receive Deposit Certificate: The bank will issue a deposit certificate with details about quantity, purity, and tenure via courier and email.
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Features & Benefits of Gold Monetisation Scheme
The Gold Monetisation Scheme offers various benefits, including secure storage, tax advantages, and flexible redemption options.
- Interest on Gold: Deposited gold earns interest based on its weight and purity, providing returns otherwise unavailable if held in physical form.
- Secure Storage: Deposits are stored in high-security bank vaults with routine audits, ensuring safety against theft and loss.
- Tax Benefits: GMS deposits are exempt from capital gains and wealth tax, enhancing returns, though the interest is subject to income tax.
- Liquidity: Depositors can use their GMS gold as collateral for loans, making it a flexible, income-generating asset.
- Redemption Options: At maturity, depositors can redeem in either cash or gold, offering flexibility according to personal preferences.
Lock-in Period & Penalties for GMS Deposits
Each deposit type has a specified lock-in period and penalty for early withdrawal, providing flexibility while ensuring stability in the banking system.
| Deposit Type | Minimum Lock-in Period | Penalty for Premature Withdrawal |
|---|---|---|
| Short-Term (STBD) | 1 Year | 0.25% deduction from the interest rate after the lock-in period. |
| Medium-Term (MTGD) | 3 Years | 3–5 years: Interest minus 0.375% 5–7 years: Interest minus 0.250% |
| Long-Term (LTGD) | 5 Years | 5–7 years: Interest minus 0.250% 7–12 years: Interest minus 0.375% |
Premature Withdrawal Options
The Gold Monetisation Scheme offers flexible premature withdrawal options after the initial lock-in period. Here’s an overview:
- Eligibility: Depositors can withdraw their gold before maturity after the minimum lock-in period.
- Payout: Banks provide the original deposit plus accrued interest, minus any applicable penalties.
- Payment Mode: Depending on the deposit type, redemption may be available in gold or INR, with fractional amounts paid in INR.
Redemption Process for GMS Deposits
The redemption process allows depositors to receive their principal and interest upon maturity. Options vary by deposit type to provide flexibility.
| Deposit Type | Redemption Option | Interest Payment Mode |
|---|---|---|
| Short-Term (STBD) | Gold or INR, based on the initial choice | Gold or INR as chosen during the deposit |
| Medium or Long-Term | Gold or INR, per depositor’s preference | Interest is always paid in INR |
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