Understanding the Gold Monetisation Scheme: Recent Changes, Key Features & More

Indian households hold about 25,000 tonnes of gold, mostly lying idle in homes and lockers. To channel this wealth into productive use, the Indian Government launched the Gold Monetisation Scheme (GMS). This scheme not only helps individuals earn interest on their gold but also boosts the country's economic efficiency by reducing gold imports. 

Here is a detailed guide on how this initiative benefits investors and how recent changes have made it even more rewarding.

Quick Synopsis

• Earn interest on your idle gold deposits.
• Tenure options from 1 to 3 years with interest paid in Indian Rupees.
• Redeem in gold or cash upon maturity as per your initial choice.

What Is Gold Monetisation Scheme?

The gold monetisation scheme is a government-backed initiative that allows individuals, trusts and institutions to deposit their idle gold with authorised banks and earn interest on it. The deposited gold is refined, certified and reused by banks or jewellers, while the depositor earns a fixed return. 

The scheme helps unlock the economic potential of privately held gold and reduces India’s dependency on gold imports.

Recent Changes and Current Status of Gold Monetisation Scheme

On March 26, 2025, the Reserve Bank of India implemented a major update by discontinuing the Medium-Term and Long-Term Government Deposit (MLTGD) components of the older scheme. The focus has now shifted entirely to the Short-Term Bank Deposits (STBD) under the updated Gold Monetisation Scheme (GMS).

Key Features of Updated Gold Monetisation Scheme

The updated scheme brings flexibility and attractive returns to gold holders. Here is what makes it stand out:

• Fixed Returns: Deposit under STBD and earn a defined gold monetisation scheme interest rate ranging between 0.50% and 0.60%, depending on how long you commit.
• Short-Term Focus: The current scheme emphasises 1-3 year deposits only.
• Dual Denomination: While your gold (principal) is measured in grams, your interest is paid in rupees as per the gold value at the time of deposit.
• Choice at Redemption: You can choose to receive your principal in physical gold or equivalent cash.
• Early Exit Permitted: After a 1-year lock-in, withdrawals are allowed at a penal interest.
• Certificate Backed: You get a Gold Deposit Certificate detailing the weight and purity of the gold. The certificate is issued in grams (up to 3 decimal places) with a purity level of 995.

These features make the scheme transparent, predictable and more accessible for gold holders.

How the Gold Monetisation Scheme Works?

The process is simple yet structured to ensure transparency. Instead of letting the gold sit locked away in a bank locker, you can deposit it just like money in a savings account and earn interest on it. 

The authorised bank basically opens a Gold Deposit Account. Interest begins from the date your deposited gold is converted to tradeable bars or 30 days after deposit, whichever is earlier. It is paid in Indian Rupees either annually on 31st March or cumulatively at the time of maturity.

Upon maturity, you receive either physical gold or equivalent cash, as chosen originally.

Eligibility Criteria of Gold Monetisation Scheme

This scheme is open to a wide group of investors, which makes it highly inclusive. Eligible entities include:

• Resident individuals
• HUFs
• Proprietorships, partnership firms
• Trusts (including SEBI-registered mutual funds/ETFs)
• Companies and charitable institutions
• Central or state government and government-owned entities

In addition, your deposit must meet the minimum 10-gram threshold and the gold must pass purity testing before acceptance.

How to Apply for the Gold Monetisation Scheme?

Here’s how an eligible depositor can open and operate a Gold Deposit Account under the Gold Monetisation Scheme:

Step 1: Visit a designated bank and complete the KYC process. 

Step 2: Submit your gold at a CPTC or GMS Mobilisation, Collection & Testing Agent (GMCTA) centre.

Step 3: Your gold will be tested for purity in your presence.

Step 4: Once verified, a deposit receipt will be issued for standard gold of 995 fineness. The GMCTA will also inform your bank about the accepted deposit.

Step 5: Your designated bank will credit the STBD account either on the same day it receives the deposit receipt or within 30 days of depositing gold at the CPTC/GMCTA, whichever is earlier.

The process is designed to ensure convenience and transparency. It allows individuals to convert idle gold into a productive, interest-bearing asset without hassle.

Final Word 

The revamped gold monetisation scheme provides a modern, transparent and efficient way to earn from your unused gold. With fixed tenures, clear interest structures and flexible redemption options, it is an attractive opportunity for anyone who wants to earn passive returns while holding on to their gold’s intrinsic value.