Gold Monetisation Scheme: Earn from your idle gold

Do you want regular income from your idle gold lying in your locker? The government’s gold monetisation scheme (GMS) allows this opportunity. One can deposit his or her idle gold in a bank and earn interest on the same. In nature, GMS works like a fixed deposit in gold. One can earn up to 2.5% interest per annum under this scheme. The interest rates will depend on the tenure of the GMS one opts for. You may also call it a gold fixed deposit. The scheme is offered by RBI designated commercial banks such as State Bank of India (SBI), HDFC Bank, ICICI Bank, PNB etc.

GMS was launched by the government in 2015. The main intention behind this scheme was to put the idle gold stored by individuals in their homes and bank lockers to productive use. With the world’s second-biggest bullion consumer, India has imported 121 tonnes of gold in August this year.

Features

– A resident Indian can invest in this scheme. GMS can be opened in joint names as well.

– The minimum deposit of gold starts from 10 grams with no limit on the maximum deposit.

– Gold is accepted in the form of raw gold i.e. gold bars, coins, jewellery excluding stones and other metals.

Tenure

GMS is available in three tenures: Short-Term Bank Deposit (STBD), Medium-term Government Deposit (MTGD) and Long-term Government Deposit (LTGD). Investors can choose any term between one and 15 years. Different tenure options are as below:

1) Short Term Bank Deposit (STBD): 1 to 3 years

2) Medium Term Government Deposit (MTGD): 5 to 7 years

3) Long Term Government Deposit (LTGD): 12 to 15 years

Interest rates

Under GMS the depositor will earn simple interest annually which is paid out or cumulative interest depending on the investment option chosen at the time of depositing the gold. On maturity, repayment can be taken either in gold or in money equivalent.

1) Short term deposit: As per RBI guidelines, respective designated banks are free to fix interest rates on these deposits. SBI, country’s largest bank is offering following interest rates:

For 1 year: 0.50% per annum

Above 1 year up to 2 years: 0.55% per annum

Above 2 years up to 3 years: 0.60% per annum

2) Medium term deposit: 2.25% per annum

3) Long term deposit: 2.50% per annum

Lock-in period

A Medium-Term Government Deposit (MTGD) can be withdrawn any time after 3 years and a Long-Term Government Deposit (LTGD) after 5 years.

Tax benefits

Interest earned under GMC is exempt from capital gains tax, wealth tax and income tax.