Gold Monetization Scheme(GMS)

Gold Monetization Scheme(GMS)

The government’s GMS permit you to deposit your idle gold with an RBI designated bank and pay interest on the same. This works the same for a bank FD. Depending on the tenure of the Gold Monetization Scheme one opts for, one can receive up to 2.5% interest per annum.

What do you mean by Gold Monetisation Scheme (GMS)?

GMS was introduced by the Gov. of India in 2015, under this yojana one can deposit their gold in any shape in a Gold Monetisation Scheme account to receive interest as the price of the gold metal goes up.

Gold Monetisation Scheme Advantages

The advantages of GMS are

  • Mobilise idle gold: The plan will assist in mobilizing gold that has been lying vegetate in the constricted spaces of trusts, households, and another institute in the country. The movement of gold in the national market will further gain the Indian gems and jewellery sector which is a crucial contributor to India’s exports.
  • Earn interest: Gold placed in your household and bank lockers never earn you anything. Honestly, when you keep gold in a bank locker, it costs you bank locker charges to keep it defended. The GMS will support you in earning interest on your gold deposits, which will add to your tour savings.
  • Avail secured storage: Bank lockers are tough to get. Opening up a gold deposit account with a bank will reduce your tension related to gold storage. Once you deposit the gold possessions, your bank will keep them safe and secured.
  • Enjoy tax benefit: The earnings on the GMS are free from income tax, capital gains tax, and wealth tax. Even when the value of the gold deposit is respected, capital gains tax will not be imposed on it or on the interest you earn from it.
  • Get flexibility on redemption: The gold depositor has the alternative to take either gold or cash on saving. However, the saving preference has to be mentioned at the deposit time.
  • Eliminate the gov. reliance on gold imports: The mobilised gold will supplement the RBI’s gold reserves. It will assist the gov. in eliminating the Gov. cost of borrowing. In a long way, it is also expected to lessen country dependency on gold imports.

Revamped Gold Deposit Scheme (R-GDS)

Gold Monetization Scheme involves the R-GDS. The plan will be accessible at all banks. All the deposits under the plan will be made at CPTC. The deposits made under the plan will initiate result interest from conversion date of gold deposit into tradable gold bars after refining or 30 days after gold receipt at the bank’s designated branch and the Collection and Purity Testing Centre, as the plot may be, whichever is earlier. Other features of the scheme are:

R-GDS Eligibility Criteria

All Indian residents are allowed for the R-GDS. This involves:

  • Individuals – jointly or singly (as Survivor or Former)
  • HUFs (Hindu Undivided Families)
  • Trusts involving Exchange Traded Funds and Mutual Funds registered under SEBI (Mutual Fund) Regulations and Companies)
  • Partnership and Proprietorship firms
  • Charitable institutions
  • Central gov., state gov. or any other entity owned by the central gov. or the state gov.

Gold Deposit Scheme Types

There are 3 kinds of deposits under GMS:

  • Short Term Gold Deposit (STGD)
  • Medium Term Gold Deposit (MTGD)
  • Long Term Gold Deposit (LTGD)

Revamped Gold Metal Loan (GML) Scheme

The GML Scheme was initiated in the year 1998. However, it was not a great hit among Indians. The gov. revamped the plan by initiating some of its fair features in Gold Monetization Scheme. Most individuals think that besides replacing GDS, Gold Monetization Scheme also replaced GML. But as per the Reserve bank of India notification, the existing Gold Metal Loan scheme will continue to race parallel to the GMS connected GML.

Features of GMS linked GML

  • The gold mobilised under STBD probably be provided to jewellers as GML. Also, the designated banks do buy the gold auctioned under MLTGD.
  • The jewellers will receive the gold delivered physically either from the designated bank or from the refiners, depending on the place where the refined gold is kept in reserve.
  • The designated banks along with nominated ones, shall be allowed to import gold only for saving of gold deposits mobilised under Short Term Bank Deposit.
  • Reserve Bank Of India has offered freedom to designated banks to decide the interest rate for the Gold Monetization Scheme -connected GML.
  • The tenure of the Gold Monetization Scheme -linked GML will be similar to the tenure of the existing Gold Metal Loan scheme.

Scheme Features

  • Easier gold storage:The usual tendency among Indians is to deposit their gold in banks storage lockers and take it out for family functions or weddings or to sell it off. However, you suppose to pay an annual fee to the bank for the storage locker. This denotes that you are spending out cash just to keep your gold safe. GMS offers safety to the gold by not only keeping it but also going back to you in the format of cash or physical gold when the scheme acquires maturity.
  • Gold Utility:Keep up your older or unused gold within a safe deposit locker in your home or even in a bank denotes that your gold is lying slothful and offer you no gain. Even if you sell out the gold, you only receive spot money. But depositing it in the GMS will not only get you interest cash, but you also have the alternative of encashing the gold at maturity. In this manner, you do take advantage of appreciating gold value.
  • Flexibility in deposits:You do deposit your gold in any shape under the GMS. You do put in coins or gold bars, and even jewellery. However, gold jewellery coated with gemstones could not be deposited in this plan.
  • Flexibility in deposit quantity: The minimum deposit you can do in a GMS is 30 grams of any purity. There is no maximum limit.
  • Convenient tenures: There are a few term deposit plans accessible under GMS:
    1. Short term:1 to 3 years
    2. Medium-term:5 to 7 years
    3. Long term:12 to 15 years
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