The Gold Monetisation Scheme (GMS) is an initiative launched by the Government of India in September 2015 to help individuals and institutions earn returns on idle gold. In a country like India, where gold is deeply linked to tradition and long-term savings, a large amount of gold remains unused for years—locked away in homes, temple treasuries, and bank lockers. The Gold Monetisation Scheme was introduced to bring this unused gold into the formal financial system while allowing depositors to benefit through interest earnings.

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In simple terms, this scheme allows you to deposit your physical gold—such as jewellery, coins, or bars—into an authorised bank through a purity testing process. Once deposited, you earn annual interest on the gold amount credited into your account. At maturity, you can receive redemption either in gold or cash equivalent depending on the scheme type and bank terms.

The Gold Monetisation Scheme is often seen as a smart option for people who have gold that is not being actively used. Instead of letting it sit in lockers (and paying annual locker fees), depositors can potentially generate returns, improve gold safety, and still retain the long-term wealth value that gold traditionally offers.

Gold Monetisation Scheme (GMS)

At its core, the Gold Monetisation Scheme is a consolidated and upgraded gold deposit framework that combines two earlier schemes into a single, more accessible structure. This scheme includes the older Gold Deposit Scheme and the Gold Metal Loan scheme, which were redesigned and linked together to improve nationwide adoption.

From the Government of India’s perspective, the Gold Monetisation Scheme was designed to serve a larger national economic purpose. India imports significant quantities of gold every year, and this affects the country’s trade balance and foreign exchange outflow. At the same time, Indian households, trusts, temples, and institutions collectively hold thousands of tonnes of gold. The Gold Monetisation Scheme helps mobilise this idle domestic gold, which can reduce long-term import dependence.

• Also Read: Gold Loan interest rates 2026: Lowest Gold Loan Interest Rate in India

From an individual depositor’s perspective, the Gold Monetisation Scheme provides a way to unlock returns from gold that is otherwise sitting still. Many families hold gold jewellery as a tradition, but it often remains unused for years. By depositing such gold through this scheme, you gain interest earnings while still retaining value exposure to gold.

What does “monetisation of gold” mean in simple terms?

In everyday language, “monetisation” means making an asset productive. Under the Gold Monetisation Scheme, your gold becomes a deposit that earns interest—similar to how money earns interest in a savings account or fixed deposit. Instead of earning nothing in a locker, the gold begins generating returns under regulated terms.

The objective of the GMS is:

• To mobilise the gold held by institutions or households.
• Facilitate the use of gold for productive purposes.
• Reduce the country’s reliance on the import of gold in the long run.

These objectives are important because they show that the Gold Monetisation Scheme is not just an investment tool—it is also a national-level initiative to manage gold demand sustainably.

Important Update: Discontinuation of MTGD and LTGD (from 26 March 2025)

A major development that every investor should know is that the government has decided to discontinue two deposit options under the Gold Monetisation Scheme due to changing market conditions:

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

This discontinuation applies from 26 March 2025 onwards. However, banks will continue the Short Term Gold Deposit (STGD) scheme as part of the Gold Monetisation Scheme.

This update matters because medium and long-term deposits previously allowed longer lock-ins with fixed government-set interest rates. After March 2025, the primary active product becomes STGD, which means the bank’s terms and discretion become more relevant than ever.

• Must Know: Gold Rate Prediction for the Next 5 Years in India

How Does the Gold Monetisation Scheme Work?

To understand the Gold Monetisation Scheme properly, it helps to imagine a process that combines gold testing, banking deposits, and interest earnings into one system. The scheme works similarly to a savings product, except the “deposit” is gold instead of cash. Once deposited, the gold quantity (after purity testing) is credited, and interest is calculated on that gold quantity.

In practical reality, the Gold Monetisation Scheme involves a very structured flow. First, you approach a bank that offers the scheme. Then, your physical gold is routed to a certified purity testing centre. After purity is verified and gold is converted into raw gold equivalent, the deposit value is finalised and credited.

This system helps ensure trust and transparency. Gold purity and weight are the most sensitive aspects when monetising gold. That is why the Gold Monetisation Scheme requires a scientific evaluation through authorised Collection and Purity Testing Centres (CPTCs).

Step-by-step working process

Although the full investing steps are explained later in the article, the basic workflow looks like this:

1. You apply for Gold Monetisation Scheme at a participating bank
2. You visit a CPTC for purity testing and deposit evaluation
3. Your gold is assessed, cleaned, and melted (after consent)
4. Your gold deposit quantity is confirmed based on purity
5. Your account receives gold deposit credit
6. Interest is earned through the tenure
7. Maturity proceeds are paid in gold or cash as per deposit terms

Important rule: Jewellery with stones or embedded materials

A key point that many depositors misunderstand is that gold jewellery containing stones, beads, or embedded metals is not deposited “as jewellery.” Instead, only the gold component is considered. The CPTC removes non-gold materials, and the final deposited quantity depends on actual gold content.

This means the Gold Monetisation Scheme is ideal for people who are comfortable converting jewellery into gold value, not for those who want to preserve exact ornaments.

How interest is paid

The interest earned under the Gold Monetisation Scheme is paid either in:

• gold, or
• money equivalent

This flexibility is useful because some depositors prefer gold accumulation while others prefer cash-like income.

How principal is repaid at maturity

At maturity, repayment is offered in:

• gold, or
• cash equivalent (based on gold value)

However, the repayment form depends on the type of deposit and bank policies.

Will you receive the same jewellery back?

This is one of the most important practical truths: you usually do not receive the same jewellery back. The gold may be returned as a different form such as coins or bullion. This happens because the jewellery is melted during the process. So emotionally valuable or heirloom jewellery may not be the best choice for GMS deposit.

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Features of the Gold Monetisation Scheme

A well-designed scheme must include flexibility, security, eligibility support, and realistic deposit rules. The Gold Monetisation Scheme offers multiple features that make it suitable for households, institutions, trusts, and larger gold holders.

These features ensure that the scheme works both for small depositors with 10 grams and for large institutions with extensive gold holdings. The absence of a maximum limit is one of the most unique aspects of the Gold Monetisation Scheme.

Key Features

• Minimum Deposit: The minimum deposit under the GMS at any one time is 10 grams of raw gold.
• Maximum Deposit: There is no maximum deposit limit.
• Type of Deposits: There are three types of deposits under this scheme, i.e. short-term, medium-term and long-term.
• Lock-In Period: The lock-in period depends on the type of deposit. For short-term deposit the lock-in period is 1 year, for medium-term it is 3 years and for long-term it is 5 years.
• Type of Gold: Gold is accepted in the form of raw gold, i.e., jewellery, coins, and gold bars, excluding stones and other metals.
• Nomination: Nomination facility is available under this scheme.

What these features mean in practical decision-making

A major advantage for depositors is that even old or broken gold jewellery can be used, provided stones and other metals are excluded. This opens up participation for people who may not want to sell old jewellery but also don’t want it lying idle.

Nomination support increases trust and ensures the deposit remains legally manageable. This becomes helpful in family wealth planning, where multiple members share ownership of inherited gold.

Tenure of Gold Monetisation Scheme

The Gold Monetisation Scheme was designed with different tenure options to match different financial goals. Some depositors want short-term flexibility, while others prefer longer commitments. That is why the scheme included short-term, medium-term, and long-term gold deposits.

The tenure choice affects the lock-in period, interest payout expectations, and redemption behaviour. This is why depositors should not select a tenure casually. It must match their liquidity needs and financial planning timeline.

GMS Tenure Table:

Type of Deposits	Tenure	Lock-In Period
Short Term Gold Deposit (STGD)	1–3 years	At the bank’s discretion
Medium Term Gold Deposit (MTGD)	5–7 years	3 years
Long Term Gold Deposit (LTGD)	12–15 years	5 years

What does this mean after March 2025 changes?

Since MTGD and LTGD are discontinued from 26 March 2025, the main continuing category is STGD. This means depositors should focus more on:

• which banks offer STGD
• bank-discretion interest rates
• redemption conditions and flexibility
• premature withdrawal rules
• repayment type available (gold/cash)

This change makes the Gold Monetisation Scheme more flexible, but also means people must compare banks carefully.

Gold Monetisation Scheme Interest Rate

Interest rate is one of the biggest decision factors for any depositor, whether they are depositing cash or gold. Under the Gold Monetisation Scheme, interest is paid on the gold quantity deposited. This is what makes the product appealing: gold begins generating returns rather than remaining passive.

The interest rate under GMS depends on the deposit type. In the earlier structure, medium and long-term deposits had clearly defined interest rates. Short-term deposits, however, depend on the bank’s discretion, meaning interest rates can vary between banks.

Interest rates based on deposit types

• Short Term Gold Deposit (STGD): At the bank’s discretion
• Medium Term Gold Deposit (MTGD): 2.25% p.a.
• Long Term Gold Deposit (LTGD): 2.50% p.a.

Why depositors should confirm STGD interest before investing

Since STGD rates are not fixed, the interest offered can depend on factors such as:

• bank policy and appetite for gold mobilisation
• market conditions
• deposit size
• scheme adoption in that region
• branch-level availability

Therefore, before investing gold under the Gold Monetisation Scheme, it’s recommended to confirm interest conditions in writing or through official bank communication.

Eligibility for Gold Monetisation Scheme

A scheme designed to mobilise national-level gold cannot be limited only to individual households. That is why eligibility under the Gold Monetisation Scheme includes institutions, trusts, charitable bodies, and even government-linked entities.

The Reserve Bank of India has provided clear guidelines on who can deposit gold under the Gold Monetisation Scheme. This eligibility is wide because it improves the scheme’s ability to mobilise larger volumes of gold held outside formal systems.

Who is eligible to deposit gold under GMS?

• Individuals
• HUFs
• Proprietorship
• Partnership firms
• Companies
• Trusts, including exchange-traded funds and mutual funds registered under SEBI (Mutual Funds) Regulations
• Charitable institutions
• Central government, state governments or any other entity owned by central or state government

Joint deposits allowed

Joint deposits are allowed under the Gold Monetisation Scheme. Two or more eligible owners can deposit gold together, and the interest is credited to the joint account. This is helpful for families where gold is owned jointly or inherited as shared property.

This feature is also valuable for:

• joint family gold reserves
• partnership-owned gold holdings
• institutional gold managed by multiple trustees

How to Invest in Gold Monetisation Scheme?

For many first-time depositors, investing in the Gold Monetisation Scheme can feel unfamiliar because the process involves physical gold testing, bank documentation, and official deposit certification. Unlike buying gold jewellery or gold coins from a retail store, the Gold Monetisation Scheme requires you to follow a regulated procedure so that purity and weight are verified scientifically before your gold is accepted for deposit.

Most people invest in the Gold Monetisation Scheme for one of these reasons: they have unused jewellery sitting idle, they want to reduce locker costs, they want returns without selling gold, or they want to formalise gold ownership through a bank-based system. In many families, gold purchased for weddings or celebrations ends up unused for years. The scheme provides a structured way to put that idle gold to work.

Below is the official process, explained step-by-step in a more detailed way, so you understand what happens at every stage.

Step 1: Choose a bank that offers the Gold Monetisation Scheme

To begin investing in the Gold Monetisation Scheme, you must first identify a bank branch that actively offers GMS services. Not every branch of every bank offers this scheme because the branch must be connected to a Collection and Purity Testing Centre (CPTC) network.

If you are already an existing customer of that bank, the process becomes easier because your KYC is already available. If you are not a customer, the bank will require you to open a savings account or current account before proceeding.

This bank account is important because it acts as your financial link for:

• interest payouts
• maturity redemption payout (cash, if chosen)
• communication and documentation
• regulatory compliance

Step 2: Fill out the Gold Monetisation Scheme application form

Once you reach the designated bank branch, you need to fill out the Gold Monetisation Scheme application form. This is a standard procedural form and it ensures your deposit is recorded formally in the banking system.

The bank form usually covers:

• depositor identity details
• address and KYC verification
• deposit type selection (STGD / earlier MTGD / earlier LTGD)
• nominee details
• joint account holder details (if applicable)
• maturity payout preference (gold or cash, where available)

From a trust and safety perspective, always ensure you receive:

• a stamped acknowledgment copy
• reference number for tracking
• branch officer confirmation

Step 3: Visit the CPTC within 7 days

After form submission, you will be asked to visit a Collection and Purity Testing Centre (CPTC) within 7 days along with the customer copy provided by the bank.

This is not just a formality. CPTC centres are essential to the Gold Monetisation Scheme because they determine:

• purity percentage
• net gold weight
• raw gold equivalence
• eligibility of the gold item for deposit

Many people assume the bank directly accepts the jewellery. In reality, the CPTC acts as the quality gatekeeper. Without CPTC confirmation, the bank cannot credit the gold deposit.

Step 4: Submit gold with consent for melting

Once you reach the CPTC, you will submit your gold items for purity testing. Before the centre begins the process, you must give written consent for melting. This is the most critical decision point for depositors.

The melting stage is irreversible, which means:

• your jewellery design is lost
• any sentimental attachment should be considered beforehand
• you will not receive the same jewellery back in its original form

A responsible depositor should never deposit heirloom jewellery they want to pass down as jewellery. Instead, the best gold items for Gold Monetisation Scheme deposits include:

• old jewellery you don’t wear
• broken ornaments
• outdated designs you don’t use
• coins or bars without emotional attachment

Step 5: Purity testing and gold evaluation process

At the CPTC, gold testing generally follows a defined process:

First, your gold items are examined visually for:

• embedded stones
• enamel work
• mixed metals
• non-gold components

Then, the jewellery is weighed initially. After that:

• stones and non-gold parts are removed
• gold is cleaned and prepared
• melting is performed
• purity testing is completed
• final gold quantity is calculated

This ensures that the Gold Monetisation Scheme deposit is based on accurate gold content, not the gross weight of jewellery.

Step 6: Receive deposit receipt from CPTC

After the gold is tested and processed, the CPTC issues a deposit receipt mentioning:

• final accepted gold weight (in grams)
• purity details
• reference number
• deposit date

This receipt is extremely important because it is the only written confirmation of what quantity of gold has been accepted for deposit.

A good best practice is to:

• Verify the weight mentioned
• Verify purity percentage
• Match your identity details
• Store the receipt safely

Step 7: Receive deposit certificate from the bank

After CPTC confirmation, the bank processes the deposit and issues a deposit certificate. This certificate may be delivered through courier and email.

It generally includes:

• deposited gold quantity
• deposit tenure
• applicable interest rate
• maturity terms
• redemption method
• premature withdrawal conditions

This deposit certificate functions like a fixed deposit receipt, but for gold.

Key things to keep in mind before investing

Because the Gold Monetisation Scheme is a specialised product, you should keep these practical points in mind:

• Jewellery will not come back in the same form
• Deposit quantity depends on purity after melting
• STGD interest rates can vary by bank
• Maturity redemption may be in cash or gold based on terms
• Premature redemption may change benefits

When customers know these details clearly, the Gold Monetisation Scheme becomes a transparent and useful wealth tool rather than a confusing government scheme.

Bank Offering Gold Monetisation Scheme

When choosing the right provider for the Gold Monetisation Scheme, selecting the bank matters more than people realise. Even though the scheme is government-backed, implementation quality differs based on bank experience, staff training, CPTC availability, and process speed.

Some banks actively promote and manage Gold Monetisation Scheme deposits, while others may offer it only in selected branches with limited awareness. For a smooth experience, always confirm whether your nearest branch processes Gold Monetisation Scheme deposits regularly.

Below is the list of banks through which you can avail of the Gold Monetisation Scheme:

• State Bank of India
• ICICI Bank
• Bank of Baroda
• Indian Overseas Bank
• HDFC Bank
• Punjab National Bank

How to choose the best bank for the Gold Monetisation Scheme

Instead of choosing a bank randomly, compare banks based on user-centric factors such as:

• Branch availability: Whether a nearby branch is designated for GMS
• CPTC distance: How close the purity testing centre is from your location
• Interest payout clarity: Whether staff clearly explains STGD interest terms
• Customer support quality: Speed of responses and documentation help
• Transparency: Clear explanation of melting and redemption process
• Time taken: How quickly deposit certificates are issued

A bank with a smooth and well-managed Gold Monetisation Scheme process reduces stress and ensures better depositor confidence.

Repayment Under Gold Monetisation Scheme

One of the most important things depositors must understand is the repayment mechanism under the Gold Monetisation Scheme. Repayment means what you receive at the end of the deposit tenure, including principal and interest payouts.

Many first-time depositors mistakenly believe they will receive their jewellery back. However, the Gold Monetisation Scheme operates on the concept of depositing raw gold value, not storing ornaments. Therefore, repayment is based on gold quantity and its value, not original jewellery design.

The repayment provisions under the Gold Monetisation Scheme are:

• Principal Repayment on Maturity: The principal will be repaid in gold or INR equivalent of the value of deposited gold at the time of redemption.
• Interest Repayment on Maturity: The interest will be repaid in INR, based on the value of gold in Indian Rupees at the time of deposit.

Principal repayment explained in simple terms

Principal refers to the gold quantity you deposited. If you deposited 100 grams of gold (after purity testing), your principal is 100 grams.

At maturity, you may receive:

• gold equivalent, or
• INR cash equivalent

This depends on:

• deposit category
• bank discretion (especially STGD)
• maturity redemption option selected

Interest repayment explained clearly

Interest under the Gold Monetisation Scheme is typically paid in INR. Interest is not paid as jewellery. It is calculated based on rupee value at the time of deposit and paid to your linked bank account.

For depositors, this means:

• Your interest is stable and predictable
• The principal value still aligns with gold value movement
• You get returns without selling gold in open market

Gold vs cash repayment: which is better?

Choosing gold repayment may be suitable if:

• You want continued gold ownership
• You prefer physical asset holding
• You want gold for long-term family savings

Choosing cash repayment may be suitable if:

• You want liquidity and flexible use
• You need money for expenses
• You plan to reinvest elsewhere

A well-planned depositor evaluates their goal before choosing redemption preference.

Premature Redemption Under the Gold Monetisation Scheme

Premature redemption means withdrawing your gold deposit before maturity. This can happen due to emergencies or changing financial needs. While the Gold Monetisation Scheme allows premature redemption, the conditions vary based on deposit type, and early withdrawal may reduce interest benefits.

Any premature redemption of the MTGD and LTGD will only be in INR, while in the case of STGD, it will be as determined by banks. Premature redemption on STGD can be in INR or gold at the bank’s discretion.

This is a crucial rule because many depositors want gold back early. Under medium and long-term deposits, premature redemption is only paid in cash.

Why early withdrawal rules matter for depositors

Premature redemption rules matter because:

• They affect your liquidity planning
• They affect how much interest you earn
• They may change repayment form (gold or cash)
• They can involve penalty interest reductions

If you think you may need funds earlier, choose shorter tenure deposits like STGD.

Interest payable during premature redemption (MTGD and LTGD)

The applicable interest rate upon premature redemption of MTGD and LTGD is as follows:

Scheme	Lock-In Period	Actual Period of Deposit	Interest payable
MTGD	3 years	Above 3 years but below 5 years	Applicable rate for MTGD at the deposit time minus 0.375%
MTGD	3 years	Above or equal to 5 years and below 7 years	Applicable rate for MTGD at the deposit time minus 0.25%
LTGD	5 years	Above 5 years and below 7 years	Applicable rate for MTGD at the deposit time minus 0.25%
LTGD	5 years	Above or equal to 7 years but below 12 years	Applicable rate for LTGD at the deposit time minus 0.375%
LTGD	5 years	Above or equal to 12 years and below 15 years	Applicable rate for LTGD at the deposit time minus 0.25%

What does this table mean in practical language

This table shows that if you withdraw early:

• You still earn interest, but less
• Banks reduce the interest rate slightly as a penalty
• longer holding reduces penalty impact

This encourages depositors to stay invested beyond the minimum lock-in.

Real-Life Examples 

To make the Gold Monetisation Scheme easier to understand, here are realistic examples:

Example 1: Household gold jewellery deposit

A family deposits old jewellery that is no longer worn. After purity testing, the accepted gold is 120 grams. They choose STGD for 2 years. Interest is credited annually in INR. On maturity, they receive cash equivalent or gold depending on bank terms.

Example 2: Institution deposit

A charitable trust deposits unused gold coins held for years. Since there is no maximum limit, large deposits are allowed. The trust earns interest and can redeem value later for operational needs.

These examples show how the Gold Monetisation Scheme can fit different financial intentions.

Benefits of the Gold Monetisation Scheme

For Indian households, gold has traditionally served as a “silent savings account”—something stored for emergencies, weddings, or future security. However, in modern financial planning, a major drawback of physical gold is that it often stays idle for years without generating any income. This is where the Gold Monetisation Scheme offers a meaningful advantage. Instead of keeping gold locked away, the scheme gives you a regulated way to earn returns through annual interest while still keeping wealth linked to gold.

From an investor’s point of view, the Gold Monetisation Scheme has several practical benefits. These benefits apply not only to individuals but also to institutions that hold large gold reserves and want to generate value from them.

Gold Storage with Returns

One of the biggest benefits of the Gold Monetisation Scheme is that it provides safe, bank-regulated storage in exchange for returns. Many families keep gold in lockers and pay annual locker fees without any direct financial return from the gold itself. The Gold Monetisation Scheme gives an alternative approach: deposit idle gold officially and earn interest on it.

In simple terms, this means your gold becomes a productive asset rather than a passive asset. Even if interest rates are moderate, the fact that unused gold generates returns can be financially beneficial over the long term.

Encashment of Gold Appreciation

Another important benefit of the Gold Monetisation Scheme is the ability to encash gold when its price appreciates, without holding it physically at home. Gold prices generally rise over long periods, and many depositors want a formal way to benefit from this growth.

Under GMS, depositors can:

• Keep the deposit secure under the banking systems
• earn interest on it
• Receive maturity value linked to gold value

This means you benefit from both:
gold value preservation + interest earnings, which makes idle gold more financially efficient.

Flexibility in Gold Form

The Gold Monetisation Scheme offers flexibility because it accepts gold in different forms such as jewellery, bars, and coins (excluding stones and other metals). This makes it practical for households that have gold ornaments, as well as for institutions holding gold coins or bars.

The scheme is designed to accept gold in raw gold form after purity testing and conversion. This flexibility ensures that different types of gold owners can participate, instead of limiting the scheme only to bullion investors.

No Maximum Limit

One of the strongest features of the Gold Monetisation Scheme is that there is no maximum deposit limit. This is particularly important for:

• temples and trusts with large gold holdings
• large households with inherited gold reserves
• institutions holding gold assets

This allows the scheme to operate at both individual and national economic levels, supporting the larger objective of mobilising domestic gold holdings.

Reduced Risk Compared to Unorganised Selling

Many people sell gold through local or informal buyers, which can lead to:

• Incorrect purity evaluation
• low pricing due to lack of competition
• unclear deductions
• improper receipts and documentation

The Gold Monetisation Scheme provides a government-backed structured alternative where gold evaluation happens through authorised testing centres. This reduces the risk of unfair valuation and builds trust for depositors.

Tax Benefits of Gold Monetisation Scheme

Tax clarity is a major factor for many depositors because gold-related investments can trigger capital gains tax, GST implications, and reporting concerns depending on the type of transaction. One of the key reasons the Gold Monetisation Scheme attracted public interest was because of its tax advantages.

As mentioned in the scheme’s benefits, one of the best features is tax relief on returns generated under the deposit structure.

What tax benefits does GMS offer?

Under the Gold Monetisation Scheme:

• Interest earned may be exempt from income tax, depending on applicable scheme conditions
• Maturity amount may also be treated as exempt, based on scheme rules and government notifications

These tax benefits make the Gold Monetisation Scheme attractive to depositors who want wealth generation with reduced tax pressure.

Why this matters for gold owners

Normally, when people sell gold in the market, they may face:

• capital gains tax (if applicable)
• documentation requirements
• financial record implications

The Gold Monetisation Scheme offers a structured banking route that may provide smoother taxation and reporting experience compared to informal selling routes.

✅ Best practice: Because tax rules can change and depend on individual circumstances, depositors should confirm tax treatment with the bank and a qualified tax consultant for accurate compliance.

Gold Monetisation Scheme vs Sovereign Gold Bonds (SGB): What’s the Difference?

Many investors confuse the Gold Monetisation Scheme with Sovereign Gold Bonds (SGBs). While both are government-related gold-linked options, they work very differently and suit different types of investors.

Key difference in simple words

• Sovereign Gold Bonds involve buying paper/digital bonds linked to gold value
• Gold Monetisation Scheme involves depositing physical gold with banks

Core Comparison

Gold Monetisation Scheme

• You deposit your physical gold
• You earn interest on deposited quantity
• You redeem in gold or cash equivalent
• Your gold is melted and converted into raw gold

Sovereign Gold Bonds

• You purchase bonds in grams of gold
• You earn fixed interest on the bond value
• You redeem in cash based on gold price at redemption
• No physical gold is deposited

Redemption difference

Under SGB, the redemption price is based on:

• The average closing price of 999 purity gold in the previous three business days

Under the Gold Monetisation Scheme, redemption provides:

• gold or cash equivalent based on the deposited gold value at redemption

Which option is better for whom?

The Gold Monetisation Scheme is better if:

• You already own physical gold
• You want to earn returns on idle jewellery or coins
• You want a banking-backed deposit structure

SGB is better if:

• You want gold exposure without holding gold physically
• You want cleaner liquidity through financial instruments
• You want fixed interest income plus gold appreciation

Both options serve different purposes, and the best choice depends on whether you already hold gold or want to invest freshly.

Who Should Invest in Gold Monetisation Scheme?

The Gold Monetisation Scheme is ideal for specific depositor profiles. It works best when the gold is idle and not emotionally tied to family heritage.

People who should consider GMS

The Gold Monetisation Scheme is suitable if you:

• have unused gold jewellery stored for years
• own old or broken jewellery you don’t wear
• want returns without selling gold directly
• want to reduce bank locker costs
• want a formal and transparent gold deposit route

Institutions who benefit strongly

Institutions that may benefit include:

• charitable trusts
• temples and religious institutions
• NGOs holding gold reserves
• companies holding gold assets

Since there is no maximum deposit limit, institutions with large gold holdings can benefit significantly.

Who Should Avoid the Gold Monetisation Scheme?

While the Gold Monetisation Scheme offers returns and safety, it is not suitable for everyone.

You should avoid depositing gold under the scheme if:

• The jewellery is heirloom jewellery you want to preserve
• You need the same jewellery form for cultural or family events
• You are not comfortable with melting and conversion
• You want high liquidity like instant sale
• You prefer modern gold investment products like SGB or ETFs

This section is important for user trust because it prevents mis-selling and ensures readers choose responsibly.

Risks and Limitations of the Gold Monetisation Scheme

• Jewellery is melted: Deposited jewellery is melted during purity testing, so you cannot receive the same ornament back at maturity.
• Limited Bank Availability: Not all bank branches offer the Gold Monetisation Scheme, so access may be difficult in smaller cities.
• CPTC Dependency: Investors must visit authorised purity testing centres, and limited CPTC locations may delay deposit processing for many customers.
• Interest Rate Variation: Short-term gold deposit interest rates are set by banks, so returns may differ depending on bank policies.
• Premature Redemption Impact: Early withdrawal may reduce interest earnings and repayment may only be in cash, depending on scheme type.
• Documentation and Process Time: The application, purity testing, certification, and account crediting process may take time compared to selling gold directly.

Sell Gold Safely with Attica Gold Company

If you’re planning to sell old gold, jewellery, coins, or biscuits instead of locking them under long processes, choose Attica Gold Company, one of the most trusted gold buyers. Attica offers scientific purity testing, live market-linked rates, and instant payment with complete transparency. Whether you want to liquidate unused gold for emergencies or upgrade your investment strategy, Attica ensures a smooth and secure selling experience. Contact us and visit your nearest Attica Gold Company branch today and get the best value for your gold confidently.

Final Conclusion

The Gold Monetisation Scheme is a meaningful government-backed option for Indian households and institutions that hold large amounts of idle gold. Instead of keeping gold locked away without generating any financial return, depositors can use the Gold Monetisation Scheme to earn interest, benefit from gold value retention, and gain a structured banking-based deposit experience. However, since deposited gold is usually melted and not returned as the same jewellery, it is important to deposit only unused gold that is not emotionally or culturally required. When used wisely, the Gold Monetisation Scheme can turn idle gold into productive wealth.

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