Gold Monetization Scheme is an initiative to let people households earn money by putting their idle gold to good use. This scheme was launched on 5 November and it is already very popular. Gold is a valuable asset. And if you have idle gold, you can use it to earn interest on it.
This scheme will benefit the government also. This is because the government can circulate the gold throughout the country. So, this scheme will reduce the need to import the gold. And the country’s money will remain the country itself.
What Deposits are allowed under the Scheme?
- A depositor can choose the term of deposit as per his/her convenience.
- Depositors can choose short, medium or long terms.
- The short term is 1-3 years.
- The medium term is 5-7 years.
- The long term is 12-15 years.
- Banks can take the short term deposits on their own authority.
- But the banks can take medium and long terms only on behalf of government and that too, when RBI notifies.
- The depositors can deposit raw gold.
- Raw gold means either, coins, bars, biscuits or jewelry.
Who is Eligible for Gold Monetization Scheme?
Any person who is a resident of India and holds a valid Indian ID proof can deposit gold under the Gold Monetization Scheme.
What are the Benefits of the Gold Monetization Scheme?
- You can increase your savings without making any new investments. You just need to deposit the gold you already own to a bank locker.
- So, every individual can earn money by putting his/her idle gold to some use.
- Since the scheme aims at reduced gold import, you will also help in developing the country to some extent.
- It is unlike the other schemes where you cannot withdraw the investments you have made. If you are in need, you can withdraw the gold from the bank as and when you need.
- The banks are accepting 30gm of gold as the lowest gold deposit. So, even if you do not have much gold invest, you can benefit from the scheme.
Another scheme for the development of the country is Saansad Adarsh Gram Yojana.
What is the Rate of Interest for the Depositors?
Depending upon a certain factors, the rate of interest will range between 2.25% and 2.50% per annum. This is still higher than the previous rates of interest offered by the government on various savings deposit accounts.
There are some more savings schemes too with higher interest rates. You can invest in them also.
What is the Purpose of Gold Monetization Scheme from Government point of view?
If we see from the perspective of the government, this scheme will reduce gold import. The Indians have enough gold in their lockers. But they are not wearing it on a daily basis. Yet, when new demands for gold come up, the jewelers need raw gold and if country doesn’t have it, it has to import from other countries.
The banks can give the gold that people will deposit under Gold Monetization Scheme, to RBI for minting new coins. Also, MMTC can take that gold and pay some interest on it. So, in a way, it is an initiative for nation building. This scheme will make it possible to circulate the gold in the country itself and reduce the need of import. That is why, it is beneficial for government too.
Can I deposit any Type of Jewelry under the scheme?
Most of the Indians have gold in the form of jewelry. So, they must have a question here. Are all pieces of jewelry allowed under Gold Monetization Scheme? Well, it depends on certain factors. Is there are any embedded stones in the gold, the bank will not accept them. And the accepted fineness of gold is 995. So, if you have a piece of gold which is not of 995 fineness, the bank may not accept it.
How to Apply for the Gold Monetization Scheme
The basic rules to open a gold deposit account under the Gold Monetization Scheme are same as any other deposit scheme. So, the depositors can visit the nearest bank branches and enquire for a deposit account opening form.
If they are depositing the gold for a short period of time, bank will allow them to do without any further proceedings. However, if they want to deposit gold for longer duration, they will have to wait for a notification from RBI.
How does the Gold Monetization Scheme works?
The depositors will open a metal account in the bank. When the account is opened, they can bring the gold with them physically which they want to deposit. At the deposit counter, the bank agent will check the purity of the gold. He will check how much exact gold is present in the bar, coin or the piece of jewelry. And then your metal account will have that much value credits.
Customers should bring their KYC documents for a safe side. When the process is over, the bank has the right to lend the deposited gold to jewelers. The rate at which bank will lend the gold to jewelers will be higher than the rate of interest you will get.
This way, banks will earn money and you will get interest. And the jewelers will not have to pay in full for the new gold bars. And hence, this will improve the country’s economy because of reduction in import.
What are some points to keep in mind about the Gold Monetization Scheme?
- Banks accept low quantity of gold too, even 30gm of raw gold.
- Various forms of gold are accepted. Coins, bars and jewelry are generally accepted.
- The depositor can deposit as much gold as he wants. There is no upper limit on the deposit.
- A lock-in period is there. But after that, the depositor can withdraw the gold from the bank in case he needs. However, bank might charge a penalty in such a case.
- All commercial banks can implement the scheme.
- The interest rate that the depositors will get is 2.5% per annum. This is clearly higher than any other gold deposit schemes by the government.
- At the time of redemption, the people who have deposited gold for shorter durations can either choose money or gold itself in the form of interest.
Let us know about your opinion about the scheme through the comments section below.