Pradhan Mantri Gold Monetisation Scheme

Pradhan Mantri Gold Monetisation Yojana- Details, Objectives & Benefits

Pradhan Mantri Gold Monetisation Yojana

Pradhan Mantri Gold Monetisation Yojana is a scheme that facilitates the depositors of gold to earn interest on their metal accounts i.e., gold. Once the gold is deposited in metal account, it will start earning interest on the itself. When a customer brings the gold to the counter of specified agency or bank, the purity and quantity of gold is determined and is credited in the metal account. Customers may be asked to complete KYC (know-your-customer) process by the agency or bank. The deposited gold is lent by banks to jewellers at an interest rate little higher than the interest paid to the customer.


The following proposal by central government has been given under this scheme as objectives:

  • Mobilization of gold help by Indian institutions and household.
  • Jewelers and banking institutions will be responsible to preserve this gold
  • If Gold Monetisation Scheme works them reduction is possible of India’s Gold imports through mobilization of exiting gold.
  • This will be helpful to improve market liquidity
  • Under this scheme depositor’s gold will be converting into secure performing assets.

This scheme is worked by government to build up economy of gold market by reducing gold import burdens. The gold in present era became type of investment vehicle so people who hold it at home and institutions can make their assets secure.


There are few benefits under this scheme. Mainly this scheme has rights to provide these benefits as follows:

  • The depositor has option to deposit minimum of 30 grams gold.
  • The owners going to open gold saving account will not need to pay any tax like income tax, wealth tax or capital tax.
  • The GMS Interest Rate is started from 2.25% upto 2.50%.
  • The depositor have option to deposit gold as he/she can, because no maximum limit is imposed on that.

How Banks Utilize Gold Reserves

The banks or agencies utilize this gold reserves in three major ways, these are:

  1. Lend to jewelers: They lend the deposited gold to jewelers to earn interest on this lending higher than that to be paid to depositor.
  2. Currency Inflow from Foreign: The Indian banks owing gold reserves are like having assets that can be sold to other nations, that will contribute to invite Foreign Currency in our nation. This will be helpful in stabilizing the Indian Currency and making it strongest currency across the world.
  3. Meet CRR and SLR Requirements: CRR stands for Cash Reserve Ratio and SLR for Statutory Liquid Ratio. These are two basics needs from banks to be working regularly on to develop this scheme and make it more powerful by opening account.

Opening of Gold Savings Account

To open a gold saving account in any bank, one has to follow these steps:

  • When the customer produces the certificate of gold deposited at the Purity Testing Centre, the bank will in turn open a ‘Gold Savings Account’ for the customer and credit the ‘quantity’ of gold into the customer’s account. Simultaneously, the Purity Verification Centre will also inform the bank about the deposit made.
  • The bank will commit to paying an interest to the customer which will be payable after 30/60 days of opening of the Gold Savings Account. The amount of interest rate to be given is proposed to be left to the banks to decide. Both principal and interest to be paid to the depositors of gold, will be ‘valued’ in gold. For example if a customer deposits 100 grams of gold and gets 1 per cent interest, then, on maturity he has a credit of 101 grams.
  • The customer will have the option of redemption either in cash or in gold, which will have to be exercised in the beginning itself (that is, at the time of making the deposit).
  • The tenure of the deposit will be minimum 1 year and with a roll out in multiples of one year. Like a fixed deposit, breaking of locking period will be allowed.

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