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  • Savings Account Gold Monetization Scheme

    India is one of the most prominent market for any kind of gold business as we are the largest consumers of gold in the world. Hence it is no wonder government drafted a special savings account by the name Gold Monetization Scheme.


    • To drum up the gold owned by individual family unit and establishments in India.
    • To give a boost to the jewelry and gemology arena in the country by making gold accessible as a natural resource on mortgage from banks and other financial institutions.
    • To meet the domestic demand and bring down our dependence on imported gold.

     Few facts about PM’s 3 Gold Schemes

    • Gold Monetization Scheme:
      • Can fetch you up to 2.50 percent interest on your idle household gold.
      • 2.25 percent and 2.20 percent Rate on Medium and Long Term Government Deposit (MLTGD) in that order.
      • Five to seven years’ tenure for Medium Term Government Deposit and twelve to fifteen years tenure for Long Term Government Deposit.
      • Gold deposited under MLTGD will be recognized by the chosen banks on behalf of the government.
      • Interest on your gold deposits will assimilate from the day your gold gets converted to tradable ingots post refinement at any Purity Testing Centre (CPTC) or the specific bank branch.
    • Sovereign Gold Bond:
      • Sovereign gold bonds priced at INR 2684 per gram by RBI.
      • Bonds to be issued in denominations of 5, 10, 50 and 100 grams of gold.
      • Bond applications to be taken from 5th to 20th November, and will be issued on 26th.
      • The Bonds will be traded via banks and chosen post offices.
      • Bonds shall be utilized as loan security though the loan-to-value (LTV) ratio is to be made equal to ordinary gold loan directed by RBI periodically.
      • Know-your-customer (KYC) standards shall remain the same as that for buying gold. Resident proof and ID proof documents like Voter ID, Passport, Aadhaar Card, PAN or TAN Card or Driving License will be needed.
      • Under the provision of Income Tax Act, 1961 (43 of 1961), the interest on Gold Bonds shall be taxable.
      • The Bonds will be qualified for Statutory Liquidity Ratio (SLR). Commission for circulation will be disbursed at the rate of 1 percent of the subscription sum.
    • Gold Coins:
      • Gold coins of 5 and 10 grams or a 20 gram bar available.
      • Approximately 15,000 coins of 5 gm, 20,000 coins of 10 gm and 3750 gold ingots will be made obtainable via MMTC offices.

    How Gold Monetization Scheme came to be?

    Step 1: Proposal draft prepared by banks, hallmark centers, jewelers’ groups.

    Step 2: Submission to RBI & related government departments.

    Step 3: APPROVAL!

    How lucrative can Gold Monetization Scheme be?

    The Gold Monetization Scheme entails an enormous system of groundwork for enabling simple and safe supervision of gold. That's why, it would not be prudent to introduce it nationwide in the initial phase. The stakeholders are positive that the infrastructure for analyzing and filtering of gold makes a tremendous progression in time and go places.

    What does Gold Monetization entail?

    Purity Substantiation and Gold Deposit

    1. Centres to Test Gold Purity: There are presently 350 Hallmarking Hubs, certified by Bureau of Indian Standards (BIS) peppered across the nation. These places are basically ‘Purity Testing Centres’ for the Gold Monetization Scheme as they are quite resourced to test gold for purity swiftly.
    2. Primary Test: in Purity Test Centres, an initial XRF engine-test will be done to tell the customer the approximate quantity of pure gold in the given gold. If the client complies, he/ she will have to duly fill a Bank/ KYC form of consent to let them melt the gold, else they can take their gold back.

    Fire Assay Exam:

    After getting the customer’s consent, the ornament will then be scoured of its grime and studs, which will be returned to the client then and there. Total mass of the gold will be measured only once this is done and the customer will be informed. They will then proceed to melt it through a fire assay to determine its purity, which won’t take more than a few hours. Clients can watch the whole procedure through viewing galleries.

    Depositing Gold:

    So the Fire Assay Test is done! The customer is informed of the outcome and he is free to take it or reject it. One can also take back the molten gold shaped as ingots if the center is paid a minimal fee for that. But if the client wants to deposit this gold, the bank will pay these charges. If the gold is deposited with the bank, they will issue a certificate mentioning, the weight and the deposited gold’s purity. The customer has to bring at least 30 grams of gold. The benchmark is set low so as to entice small depositors too.

    Starting a Gold Savings Account with any bank – Step-by-step:

    Step 1: Get a purity certificate of the gold you have from any Centre.

    Step 2: Submit it at a preferred bank.

    Step 3: The bank will sequentially start a ‘Gold Savings Account’ for the client.

    Step 4: The certified gold can be transferred directly into the account.

    How banks disburse the interest on Gold Savings Account:

    The customer’s preferred bank will promise to pay an interest (as per the current market rates and at the discretion of the bank), which can be paid after one or two months after the account is opened. The payable principal as well as interest will be ‘gauged’ in gold. For instance if a client puts 500 grams of gold and receives one percent interest, then at the end of tenure, he gets 505 grams.

    • Reclamation: The client is given a choice of recovering the deposit either in money or in gold, which will have to be mentioned from the start.
    • Account Term: The time period of the deposit is at least one year and can be extended to multiples of a year. Here too, a ‘breaking of lockin’ is permitted just as it is for fixed deposits.
    • Tax Exemption: In this scheme, the clients are exempted from Income Tax, Wealth tax and Capital Gains Tax payment.

    The process of transferring of gold to the refiners:

    • Refineries: In India there are 32 refineries and the in the country of which, a few boasts of NABL recognized labs.
    • Transference of gold: Once the purity of the gold is determined, it will be sent to the refiners directly from the center, and will be stored in their warehouses or at the bank lockers themselves.
    • Disbursement: Bank will pay the refiner a jointly agreed fee for the aforementioned services.
    How the deposited gold is utilized in Gold Savings Account
    • Cash Reserve Ratio/ Statutory Liquid Ratio:C RBI is considering to allow the banks to show the gold deposits amassed this way as part of their CRR/SLR requirements.
    • Overseas Currency: Selling the gold will aid the bank to bring in foreign money and the funds thus made are then utilized to lend to potential business people.
    • Coins: Gold is also converted to loose change for more sales to their clients.
    • Exchanges: Banks to buy and sell on domestic commodity exchanges, where mobilized gold can be delivered.
    • Loan: Banks can mortgage gold to jewelers and others in the business.

    Process of Loaning the Gold to those in Jewelry Business:

    Step 1: Opening a Gold Loan Account

    Step 2: Distribution to gold jewelers from the refiners

    Step 3: The bank enters it in the Gold Loan Account of the Jeweler


    Though this scheme has great potential, customers are not entirely happy with the process. They also feel that given the rising value of gold, the interest offered is far less. Also, gold is more than mere yellow metal for many Indian families. Most of those ornaments are long-conserved family-heirlooms with emotional connection to them and do not want it to be melted. The government can somewhat redress this concern to some extent if they make invoices compulsory only for ingots and coins and not for traditional ornaments. Government is open to more suggestions and hope to make this scheme a success.

    News About Savings Account Gold Monetization Scheme

    • RBI Gives Out Sovereign Gold Bonds Guidelines

      The Reserve Bank of India (RBI) has distributed operative recommendations for Sovereign Gold Bonds before PM Modi’s gold scheme (functions in a similar fashion to Savings Account) is launched. In addition to Sovereign Gold Bonds, PM will also introduce two other similar schemes.

      1. Gold Monetization Scheme (GMS)
      2. Gold Coin and Bullion Scheme

      Giving out the operational rules and regulations on gold bonds, RBI said to keep application procedures strictly to usual banking hours. Relevant extra information may be collected from the applicants directly and the staff in charge is supposed to make sure that the application form is filled properly and fully. The central bank also stressed that the applicants will be given an interest rate, same as the current bank rate for their savings account products. You may cancel your application until the closing date (20th November

      13th November 2015

    • Permit for Gold Monetization Scheme by GOVT

      The government has made two crucial moves that is intended to bring down the dense gold import to the country. The first step involves the issuance of gold bonds that people can capitalize in as opposed to purchasing it. The second is the Gold Monetization Scheme, which is a savings or deposit tool to encourage a person to earn on their gold idling at home or bank lockers. These gold will be re-invested.

      India being the country that has the maximum demand of gold and more number of gold users than any other place, these moves can be said as rewarding. Though deemed as a safe and secure investment method, the huge import quantity has put immense burden on the current account shortfall. Consequently, the government declared gold bonds that can be bought by resident Indians with yearly limit on investment of up to 500 grams per individual.

      10th September 2015


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