Gold Monetization Scheme (GMS) gives people an opportunity to earn from the gold kept in their homes or bank lockers. Under this, you can deposit your gold and earn interest on it. However, availing the benefits of this scheme is not as easy as it seems. Many people have a deep emotional and familial connection with their gold jewelry. Let us know in detail what is Gold Monetization Scheme and how it works.
Gold Monetization Scheme
Under the Gold Monetization Scheme, you can earn interest on the gold kept in your house by depositing it in the bank. This includes hoarding jewellery, coins or gold bars (bars). The bank gives interest at a fixed rate on these deposits. As per the rules, when the deposit period is over, you are returned either in cash (equal to the market price at that time) or the gold. In short, this scheme gives you an opportunity to earn from the gold that would otherwise be lying idle in your house.
Recent changes in the scheme
To further improve this initiative, the government has made some structural changes in the scheme. From March 2025, investors will primarily be able to use only the ‘Short-Term Bank Deposit’ (STBD) option.
Disadvantages of the scheme
1. Under the Gold Monetization Scheme, to check the purity of gold, it is necessary to get it ‘fire assayed’ (tested by heating it in fire). In this process gold has to be melted. As a result, impurities are removed during this process, which can reduce the actual weight of the gold.
2. For Indian investors, gold is not just a financial investment vehicle; It also has deep emotional and family significance for them. Therefore, many families do not easily accept the idea of melting their gold. In many homes, gold jewelry is considered a symbol of heritage and emotional attachment.
3. Under this scheme, ‘making charges’ (cost of making jewellery) are not included while valuing gold. This means that if you have paid a making charge of 15% to 20% on your jewellery, you will suffer a direct financial loss equal to that amount.
4. By depositing gold for a long period under this scheme, your gold remains deposited (locked) in the bank for a long period. This means that you cannot easily withdraw your gold ahead of time when you need it. Additionally, penalties are imposed on any violation of the terms and conditions of the scheme.
