Gold Monetisation Scheme: The Gold Monetisation Scheme or GMS, is a government plan made to bring unused gold into the financial system instead of keeping it idle at home or in lockers. It was launched by the Government of India in 2015. The main idea is simple. Families and institutions can place their gold into the scheme and earn returns from it. The goal is also to reduce India’s need to bring in so much gold from outside the country.
The scheme is open to resident Indians. That includes individuals, Hindu Undivided Families, proprietorships, partnership firms, trusts, mutual funds, exchange traded funds, companies, and even government bodies owned by the Centre or states. So the net is wide, but the gold still has to come from eligible residents.
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Who is eligible to deposit in the scheme?
Resident Indians are eligible, including:
- Individuals
- Hindu Undivided Families (HUFs)
- Trusts including Mutual Funds/ETFs registered under SEBI regulations
- Companies
- Partnership Firms
- Charitable Institutions
- Central and State Government entities
Joint deposits are permitted in accordance with applicable banking rules relating to joint accounts and nomination.
How people Deposit Gold?
Right now, only the Short Term Bank Deposit part is active. The Medium Term Government Deposit and Long Term Government Deposit parts were discontinued from 26 March 2025, including renewals. The short-term option stays open for 1 to 3 years, and the bank decides the interest rate for those deposits.
Gold is given at authorised Collection and Purity Testing Centres, or at GMS Mobilisation, Collection and Testing Agents. The gold is checked in front of the depositor. After that, it is turned into standard gold bars of 995 fineness and credited to a Gold Deposit Account in a designated bank. Interest starts from the date the gold is converted into tradable bars or 30 days after the gold reaches the centre, whichever happens first.
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What is the Smallest Deposit?
The smallest deposit is 10 grams of raw gold. That can be in the form of bars, coins, or jewellery, but stones and other metals are not counted. There is no upper limit. The amount is shown up to three decimal places of a gram.
What happens at Maturity?
When the deposit ends, the person can choose to take gold of the same value, or get the rupee value of that gold instead. Interest is paid in Indian rupees, and banks may also offer loans against the Gold Deposit Certificates issued under the scheme.
If jewellery is deposited, it is tested first. If the depositor agrees, the jewellery is melted. After that, it cannot be returned in its original jewellery form. KYC is also required before depositing gold, unless the customer is already KYC compliant with that bank. Early withdrawal for short-term deposits is handled by the bank under the scheme rules.
The scheme was made for a plain reason. India has a lot of gold lying unused, and the government wants that gold to work inside the financial system instead of just sleeping in cupboards and lockers like a silent treasure.
