The Gold Monetisation Scheme can be categorised as follows:
- Short-term gold deposits (1-3 years)
- Medium-term gold deposits (5-7 years)
- Long-term gold deposits (12-15 years)
In February 2021, the Ministry of Finance approved amendments to Gold Monetisation Scheme and Indian Gold Coin Scheme, with the goal of making these schemes simpler, more appealing, and more successful. The revised GMS offers the following options to investors:
Minimum investment limit
In the revised GMS, the minimum deposit limit has been lowered from 30 grams to 10 grams, with no maximum limit, allowing a wider range of people to open gold deposit accounts.
In addition, investors would earn 2.25% interest and 2.50% interest on medium- and long-term gold deposits within 5-7 years and 12-15 years, respectively..
Increased participation of banks and jewellers
The revised GMS allowed all banks (public sector banks and private banks) and jewellers to participate in the scheme and offer it on demand. This move was a significant step to improve the scheme's ability to tap privately held gold stocks more efficiently. Moreover, this is likely to augment the use of domestic gold stocks to meet the domestic manufacturing sector’s demand for precious metals and boost the availability of gold metal loans for the jewellery industry.
Jewellers as collection and purity testing centres (CPTCs)
The revised GMS aimed to incentivise jewellers by allowing them to participate as ‘Gold Mobilisation Agents’ and ‘Collection and Purity Testing Centres’ (CPTCs). This move will benefit jewellers by creating additional revenue streams. Also, the extended participation of jewellers is likely to drive their existing customers into the scheme, making GMS more accessible and boosting its adoption.
Gold Monetisation Scheme Banks
As per MCX Futures (Multi Commodity Exchange of India Limited), in FY21, GMS collection recorded >42 tonnes of precious metals, indicating a significant improvement over the previous years.
According to the Finance Ministry, under the Gold Monetisation Scheme, six banks, led by the State Bank of India (SBI), mobilised 68% more gold YoY from households and temple trusts, at 4.643 tonnes in FY20, compared with 2.763 tonnes in FY19. Of the total amount, SBI held the largest 94% (4.370 tonnes), bringing the bank’s cumulative gold mobilisation at 13.212 tonnes. It was followed by HDFC Bank (209.99 kg or 0.20999 tonnes), Nova Scotia Bank (40 kg or 0.04 tonnes), Indian Overseas Bank (15 kg or 0.015 tonnes), ICICI Bank (6.09 kg or 0.00609 tonnes) and Punjab National Bank (1.51 kg or 0.00151 tonnes).
As per the annual report of Finance Ministry for 2023-24, approximately 30.15 tonnes of gold were mobilised under GMS till March 2024 with 10 participating banks and 5,193 depositors. Out of these 30.15 tonnes, 7.459 tonnes of gold were under short term deposits, 9.369 tonnes under medium term deposits and 13.331 tonnes under long term deposits.
State Bank of India mobilised 2.562 tonnes of gold under GMS and 4.816 tonnes under gold bonds during FY24.