Gold Monetization Scheme
To control the increasing demand for gold and the increasing current account deficit of the country, the government has increased the gold import duty. Now the effective import duty on gold has been increased from 6% to 15%. This includes 10% basic custom duty and 5% agriculture infrastructure and development cess. A few days ago, Prime Minister Narendra Modi had also appealed to the people to postpone the purchase of gold for a year. In such a situation, the question arises that what can be the other option for investing or using gold? Meanwhile, Gold Monetization Scheme (GMS) has again come into discussion.
What is Gold Monetization Scheme?
Under the Gold Monetization Scheme, any Indian can deposit the gold kept in his home or bank locker like jewellery, gold coins or bars in the bank for a fixed period of time. In return the bank pays interest on that gold. On maturity, the customer can either take the money as per the current price of gold or can withdraw the physical gold. The objective of this scheme is to utilize the idle gold lying in homes, institutions and temples and reduce the country’s dependence on gold imports.
Keep this important thing in mind
The biggest condition of this scheme is that the same jewelery deposited is not returned. The bank melts the jewelery and turns it into gold bars. If there are stones or gems in the jewellery, they are first removed and returned. Also, if any adulteration is found during the purity test of gold, then the amount of gold deposited may be reduced.
How does the process work?
First of all, one has to complete KYC and open a zero balance gold deposit account in an authorized bank. After this the gold is deposited at the Collection and Purity Testing Center (CPTC) included in the list of the bank. There the gold is tested and the price is decided according to 995 fineness. The bank credits the value of gold in the account within about 30 days and a certificate of deposit is issued.
Which scheme is currently operational?
The government has closed the medium term and long term scheme of GMS from March 2025. At present only Short Term Bank Deposit Scheme is available, whose tenure is 1 to 3 years.
What to check before depositing gold?
Before depositing gold, definitely understand the method of interest payment. Some banks pay interest every year, while some only on maturity. Apart from this, the facility of premature withdrawal of money and whether the payment on maturity will be in gold or cash should also be clarified first.
