What is Gold Monetization Scheme?

The Union Cabinet, under the leadership of PM Narendra Modi, first discussed the Gold Monetization Scheme during the presentation of the Union Budget for 2015–16. On November 5, 2015, the Indian government unveiled the Gold Monetization Scheme (GMS), a program designed to monetize the gold that is currently stored in Indian households and put it to useful use. The government also announced the launch of the Sovereign Gold Bond Scheme and the creation of the Indian Gold Coin in addition to the Gold Monetization Scheme.

Objectives of the Gold Monetization Scheme:

1. Mobilization of the gold that is held by the country’s numerous households.
2. To lessen gold imports in order to meet domestic demand.
3. To provide gold loans from banks in order to assist and enhance the gold and jewellery sectors.
4. To give depositors certificates stating the quantity and purity of gold they have placed.

Features of the Gold Monetization Scheme:

1. The program offers no maximum investment limit; short-term bank deposits (1-3 years), medium-term deposits (5-7 years), and long-term government deposits (12-15 years).
2. Under this program, a gold bar, coin, or piece of jewelry weighing no less than 30 grams of raw gold may be deposited.
3. The program permits early withdrawal following a required lock-in period. It does, however, impose a fee for such withdrawals.
4. The Gold Monetization Scheme offers an interest rate of 2.50 percent annually, which is higher than the rates provided by earlier gold investments.
5. The program also provides the option to redeem short-term deposits for gold or dollars at an ongoing rate.

Benefits of the Gold Monetization Scheme:

1. The Gold Deposit Scheme (GDS), which had been in place since 1999, was replaced by the Gold Monetization Scheme.
2. The scheme enables gold depositors to receive interest at a rate of 2.25 percent per year on short-term deposits between one and three years.
3. The depositors receive a 2.5 percent interest rate for medium- and long-term deposits.
4. The program, which was introduced in 2015, guarantees the mobilization of gold owned by various Indian families and institutions.

Related Frequently Asked Questions and Solutions:

Question 1: When was the Gold Monetization Scheme launched?

Answer: 

The Union Cabinet, under the leadership of PM Narendra Modi, first discussed the Gold Monetization Scheme during the presentation of the Union Budget for 2015–16. On November 5, 2015, the Indian government unveiled the Gold Monetization Scheme (GMS), a program designed to monetize the gold that is currently stored in Indian households and put it to useful use. The government also announced the launch of the Sovereign Gold Bond Scheme and the creation of the Indian Gold Coin in addition to the Gold Monetization Scheme.

Question 2: What are the objectives of the Gold Monetization Scheme?

Answer: The objectives of the Gold Monetization Scheme are-

• Mobilization of the gold that is held by the country’s numerous households.
• To lessen gold imports in order to meet domestic demand.
• To provide gold loans from banks in order to assist and enhance the gold and jewelry sectors.
• To give depositors certificates stating the quantity and purity of gold they have placed.

Question 3: What are the features of the Gold Monetization Scheme?

Answer:  The features of the Gold Monetization Scheme are-

1. The program offers no maximum investment limit; short-term bank deposits (1-3 years), medium-term deposits (5-7 years), and long-term government deposits (12-15 years).
2. Under this program, a gold bar, coin, or piece of jewelry weighing no less than 30 grams of raw gold may be deposited.
3. The program permits early withdrawal following a required lock-in period. It does, however, impose a fee for such withdrawals.
4. The Gold Monetization Scheme offers an interest rate of 2.50 percent annually, which is higher than the rates provided by earlier gold investments.
5. The program also provides the option to redeem short-term deposits for gold or dollars at the ongoing rate.

Question 4: What are the benefits of the Gold Monetization Scheme?

Answer:  The benefits of the Gold Monetization Scheme are-

1. The Gold Deposit Scheme (GDS), which had been in place since 1999, was replaced by the Gold Monetization Scheme.
2. The scheme enables gold depositors to receive interest at a rate of 2.25 percent per year on short-term deposits between one and three years.
3. The depositors receive a 2.5 percent interest rate for medium- and long-term deposits.
4. The program, which was introduced in 2015, guarantees the mobilization of gold owned by various Indian families and institutions.