Gold Monetisation Scheme: A Comprehensive Overview
- Rajesh Kumar Kar
- Dec 12, 2025
- 7 min read
Introduction
The Central Government launched the Gold Monetisation Scheme to give people several ways to make money from their privately held gold. The Gold Monetisation Scheme can be used to earn interest by exchanging the gold on hand because Indians have a significant appetite for gold and gold jewellery. The gold monetisation system also includes the government's updated Gold Deposit system and the updated Gold Metal Loan Scheme.
Table of Contents
What is the Gold Monetisation Scheme (GMS)?
The former "Gold Deposit Scheme" and the "Gold Metal Loan" scheme have been redesigned and integrated into the GMS to become the Gold Monetisation Scheme. Individuals and institutions can profit from their gold reserves through the GMS. The GMS's goals are to deploy the gold that households or institutions own, encourage the productive use of gold, and lessen the nation's long-term dependency on gold imports. The government has decided to end the Medium-Term Gold Deposit (MTGD) and Long-Term Gold Deposit (LTGD) under the Gold Monetisation Scheme (GMS) on March 26, 2025, due to the changing market conditions. Nonetheless, under the GMS, the banks will maintain the Short-Term Gold Deposit (STGD) program.
Features of the Gold Monetisation Scheme
Type of Gold: Raw gold, such as jewellery, coins, and gold bars, is accepted; stones and other metals are not.
Minimum Deposit: Ten grammes of raw gold must be deposited at any given moment under the GMS.
Maximum Deposit: There isn't a maximum amount that can be deposited.
Deposit Types: This plan offers three different deposit types: short-term, medium-term, and long-term.
Lock-In Period: Depending on the kind of deposit, there are different lock-in periods. The lock-in duration is one year for short-term deposits, three years for medium-term deposits, and five years for long-term deposits.
Nomination: This scheme offers a nomination facility.
Benefits of Investing in the Gold Monetisation Scheme
Encashment of gold: By investing in GMS, qualified individuals or organisations can encash the value of gold when it increases in value. With GMS, gold may be used as effectively as possible. Investing in gold under GMS makes it safer and allows the person or organisation to make money from it.
Gold Storage with Returns: The GMS offers the opportunity to keep idle gold in banks for a short, medium, or long period of time without having to pay locker fees while earning interest. As a result, the GMS offers the chance to profit from gold that would otherwise remain in lockers.
Flexibility: The GMS does not need gold investments in a particular format. Gold coins, bars, and jewellery can be purchased by a person or organisation. Additionally, the amount of gold that can be invested under the GMS is unlimited.
Benefits related to taxes: One of the GMS's strongest advantages is that any earnings made by an individual or organisation under the plan are exempt from capital gains tax. Interest and maturity cash payments are free from income tax when the GMS matures.
How Does the Gold Monetisation Scheme Work
The costs paid to bank lockers where the gold is stored for security are saved by the GMS, which functions similarly to a savings bank account. A person or organisation may deposit gold in a bank savings account under the GMS and receive interest. It should be mentioned, nonetheless, that a person cannot deposit gold jewellery that has embedded stones or other metals. Either gold or money equivalent is used to pay interest received under the GMS. On the day of the deposit or investment maturity, the GMS offers the choice to repay the principal in gold or cash equal to the value of gold. At the time of maturity, the deposited gold jewellery may be repaid in a different form, such as coin or bullion. It's possible that the gold will not be returned in the same form as it was deposited.
Banks Offering Gold Monetisation Scheme
The Gold Monetisation Scheme is offered by the following banks:
Bank of Baroda
HDFC Bank
ICICI Bank
Indian Overseas Bank
Punjab National Bank
State Bank of India
Eligibility for Gold Monetisation Scheme
The eligibility requirements for the gold monetisation initiative have been announced by the Reserve Bank of India. Gold deposits in the GMS are possible for the following:
Individuals
HUFs
Proprietors
Partnership firms
Companies
Charitable institutions
Trusts, including exchange-traded funds and mutual funds under SEBI/Mutual Funds Regulations
Central government, state governments, or any other entity owned by the central or state government
Additionally, under the gold monetisation system, two or more eligible owners may make joint deposits, according to the RBI. When investors open joint deposit accounts, the bank will credit the interest to those accounts.
Gold Monetisation Scheme Interest Rates
The following investment plan determines the GMS interest rate for gold deposits:
Short Term Gold Deposit (STGD): At the bank's discretion.
Medium Term Gold Deposit (MTGD): 2.25% annually
Long Term Gold Deposit (LTGD): 2.50% annually
Tenure of Gold Monetisation Scheme
The following table shows the term-specific tenures and lock-in periods for the gold monetization scheme:
Deposit Type
| Tenure
| Lock-In Period
|
Short Term Gold Deposit (STGD) | 1-3 years | At the bank’s discretion |
Medium Term Gold Deposit (MTGD) | 5-7 years | 3 years |
Long Term Gold Deposit (LTGD) | 12-15 years | 5 years |
Steps to Invest in the Gold Monetisation Scheme
Step 1: Any approved branch is open to current customers of the banks that provide the GMS service. To choose the GMS if you are not a customer of a bank that offers it, you must first create a current or savings account with the bank.
Step 2: Once at the bank, complete the application for the Gold Monetisation Scheme (GMS) at the branch.
Step 3: After completing the GMS application, provide a customer copy to the closest Collection and Purity Testing Centre (CPTC) within seven days.
Step 4: Get the deposit receipt from the centre with the amount of gold and purity information after submitting the gold to the CPTC with permission for the melting procedure.
Step 5: The deposit certificate, which includes information on the quantity, quality, and scheme details of the gold, will be sent to you via courier and registered email.
Repayment Under Gold Monetisation Scheme
The Gold Monetisation Scheme's payback terms are as follows:
Principal Repayment at Maturity: At the time of redemption, the principal will be paid back in gold or INR equal to the value of the gold invested.
Interest Repayment at Maturity: Depending on the gold's worth in Indian Rupees at the time of deposit, interest will be paid back in INR.
Gold Monetisation Scheme Premature Redemption
For MTGD and LTGD, any early redemption will only be in Indian rupees (INR); for STBD, the amount would be decided by the banks. The bank may choose to accept premature STGD redemptions in gold or INR. When MTGD and LTGD are prematurely redeemed, the following interest rates apply:
Scheme
| Lock-In Period
| Actual Period of the Deposit
| Interest payable
|
MTGD | 3 years | Above 3 years but below 5 years | Applicable MTGD rate at the deposit time minus 0.375% |
|
| Above or equal to 5 years and below 7 years | Applicable MTGD rate at the deposit time minus 0.25% |
LTGD | 5 years | Above 5 years and below 7 years | Applicable MTGD rate at the deposit time minus 0.25% |
|
| Above or equal to 7 years but below 12 years | Applicable LTGD rate at the deposit time minus 0.375% |
|
| Above or equal to 12 years and below 15 years | Applicable LTGD rate at the deposit time minus 0.25% |
Conclusion
Individuals or organisations can make money from their idle physical gold under the Gold Monetisation Scheme (GMS). This program allows depositors to profit from the increase in gold prices while providing a principal and interest amount for the gold invested. Additionally, depositors can improve their wealth by taking advantage of tax benefits on both the principal and interest.
Frequently Asked Questions
Does the Gold Monetization Scheme permit withdrawal of investments?
It is possible to withdraw your investments from the scheme. Once the minimum lock-in period has passed, you can take your gold out.
How many deposit schemes are available under the GMS?
The Gold Monetisation Scheme used to offer three different schemes: Short Term Bank Deposits (SRBD), Medium-Term, and Long-Term Government Deposits (MLTGD). However, the Medium-Term and Long-Term GMS Schemes were terminated by the Indian government as of March 26, 2025.
What is the tenure of a Short-Term Bank Deposit (SRBD)?
A short-term bank deposit has a duration of one to three years.
What is the maximum deposit in the Gold Monetisation Scheme?
The Gold Monetisation Scheme does not have a maximum deposit cap. The minimum deposit, however, is 10 grammes of raw gold, which includes gold bars, coins, and jewellery.
What is the lock-in period for the Gold Monetisation Scheme?
The type of deposit determines the lock-in time for the Gold Monetisation Scheme. The bank has the last say on the lock-in period for short-term deposits. For medium-term deposits, the lock-in period is three years; for long-term deposits, it is five years.
Is the Gold Monetisation Scheme safe?
Yes, the Gold Monetisation Scheme is secure since the Indian government supports it. It is a dependable and low-risk choice. Regardless of market swings, it ensures the security of the gold deposited and offers steady returns.
What is the interest rate for Gold Monetisation?
Three different deposit options are available under the Gold Monetisation Scheme. The interest rate for short-term gold deposits is determined by the individual banks. The interest rate is 2.25% per year for medium-term gold deposits and 2.50% per year for long-term gold deposits.
Is joint ownership possible under this scheme?
Under this scheme, two or more qualifying depositors may choose joint ownership. The deposits will be credited to a joint deposit account that must be formed in the depositors' names. The nomination facility and all other current regulations pertaining to joint bank account operations shall be applied.
Is interbank gold lending mobilized under GMS allowed?
Yes, this plan permits the lending of gold mobilised under GMS from one designated bank to another.
What is the difference between the Gold Bond Scheme and the Gold Monetisation Scheme?
While the Gold Monetisation Scheme (GMS) allows people or organisations to deposit their actual gold with banks, Sovereign Gold Bonds (SGB) allow people or corporations to buy bonds valued in grammes of gold. Investors receive interest on the gold bonds they purchase under SGB, while they receive interest on the gold they deposit under GMS. Investors who redeem SGBs will receive a sum determined by the average closing price of 999 pure gold during the preceding three business days. When GMS is redeemed, investors will either receive gold or an amount equivalent to the value of the gold they placed at that time.
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