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Gold Monetisation Scheme (GMS), 2015

Gold Monetisation Scheme (GMS), 2015


The Government of India announced the Gold Monetisation Scheme vide its Office Memorandum F.No.20/6/2015-FT dated September 15, 2015. The objective of the Scheme is to mobilise gold held by households and institutions of the country and facilitate its use for productive purposes, and in the long run, to reduce country’s reliance on the import of gold.

The Gold Monetization Scheme comprises of the previous 'Gold Deposit Scheme’ and the 'Gold Metal Loan’ scheme, revamped and linked together in GMS.

  • Revamped Gold Deposit Scheme
  • The gold is accepted at the Collection and Purity Testing Centres (CPTC) certified by Bureau of Indian Standards (BIS). The deposit certificates are issued by banks in equivalent of 995 fineness of gold. The designated banks (ICICI Bank, Corporation Bank/Union Bank of India, Indian Overseas Bank, Punjab National Bank, State Bank of India, HDFC Bank, Yes Bank, Dena Bank/Bank of Baroda) accept gold deposits under the Short Term (1-3 years) Bank Deposit (STBD) as well as Medium (5-7 years) and Long (12-15 years) Term Government Deposit Schemes (MLTGD). While the former is accepted by banks on their own account, the latter is on behalf of the Government of India.

    Interest: The amount of interest rate payable for deposits made for the short-term period   is decided by the banks on the basis of the prevailing international lease rates, other costs, market conditions etc. and the same is borne by the banks. For the medium and long-term deposits, the rate of interest is decided by the government, in consultation with the RBI from time to time and the same is borne by the Central Govt. Govt. of India has finalized interest rate on premature closure of MLTGD before/after lock in period in case of death of depositor and due to loan default by the depositor and the same has been notified by RBI on 28th October, 2021.  

    Redemption: For short term deposits and MLTGD, the customer will have the option of redemption of the principal at maturity in Indian rupee equivalent of the value of deposited gold at the time of redemption or in gold. However, any pre mature redemption of MLTGD will be in INR only. In case of STBD, any pre mature redemption shall be in Indian rupee equivaled or gold at the discretion of the designated bank. In case of redemption in gold, any fractional quantity (for which a standard gold bar/ coin is not available) would be paid in cash.
    Interest in respect of STBD and MLTGD shall be denominated and paid in Indian rupee only. For more clarity, Govt. of India has issued Redemption Guidelines for MLTGD Scheme which has been incorporated by RBI in its Master Directions on 4th August 2022.

    Tax implications on GMS shall be notified by the Central Government from time to time. However, it is clarified that Tax exemption, same as those available under GDS, would be made available to the customers, in the revamped GDS, as applicable. In this direction, the enabling notifications issued by GOI are:
    (a) Exemption of interest earned on gold deposit bonds from Income Tax vide amendment to section 10(15)(vi) of the Income Tax Act by Finance Act 1999. Exemption of various assets deposited in the scheme from Wealth Tax under Section 2(ea) of Wealth Tax Act as amended by Finance Act 1999.
    (b) Exemption from capital gains made on the bonds though trading or at redemption from Capital Gains Tax under section 2(14)(vi) of Income Tax Act as amended by finance Act 1999.
    Further, as per CBDT instructions No. 1916 dated 11th May, 1994 in course of IT Search u/s 132, gold jewellery to the extent of 500 gms per married lady, 250 gms per unmarried lady and 100 gms per male member of the family, need not be seized by the authorities, but the tax penalties, as applicable will be levied.

  • Revamped Gold Metal Loan Scheme
  • Gold Metal Loan Account: A Gold Metal Loan Account, denominated in grams of gold, will be opened by the bank for jewelers. The gold mobilized through the revamped GDS, under the short-term option, will be provided to jewelers on loan, on the basis of the terms and conditions set-out by banks, under the guidance of RBI.

    Delivery of gold to jewelers: When a gold loan is sanctioned, the jewelers will receive physical delivery of gold from refiners. The banks will, in turn, make the requisite entry in the jewelers’ Gold Loan Account. Interest received by banks: The interest rate charged on the GML will be decided by banks, with guidance from the RBI.

    Tenor: The tenor of the GML at present is 180 days. Given that the minimum lock-in period for gold deposits will be one year, based on experience gained, this tenor of GML may be re-examined in future and appropriate modifications made, if required.

  • Indian Gold Coin
  • The Indian gold coin is a part of the Gold Monetisation Programme. The coin is the first ever national gold coin minted in India and has the National Emblem of Ashok Chakra engraved on one side and Mahatma Gandhi on the other side. The coins are available in denominations of 5, 10 and 20 grams. The Indian Gold coin & bullion is unique in many aspects and carries advanced anti-counterfeit features and tamper proof packaging. The Indian Gold coin & bullion is of 24 carat purity and all coins & bullion are hallmarked as per the BIS standards.

  • Amendments in Gold Deposit Scheme and India Gold Coin
  • Ministry of Finance has approved amendments to Gold Monetisation scheme and amendments to Indian Gold Coin Scheme vide its Office Memorandum No. 1/21/2020-FT dated 9th February, 2021 which aim, to make the scheme simple, attractive and successful.

    The key amendments to Revamped Gold Deposit Scheme include increasing the number of branches of Public Sector Banks in all towns to be designated as GMS service branches, dematerialisation of MTGD and LTGD Deposit Certificates to make them tradeable and Mortgageable, Jewelers/Refiners to be engaged as Gold Mobilisation Agents and CPTCs, interest payment in STBD denominated and to be paid in INR terms, reducing the minimum deposit under R-GDS to 10 grams of gold, permitting banks to buy standard locally refined/ sourced gold from refineries and Gold Spot Exchanges, allowing interbank lending of IGDS/LBMA standard Bullion, development of GMS Digital Platform and use of MLTGD Gold under GMS for Bullion Leasing under GML.

    The key amendments to Revamped Gold Metal Loan Scheme include repayment of GML in lots of 1KG, repayment of gold loan under GML using locally sourced IGDS standard bullion and that GML will be made available to all jewelers with a valid Working Capital Credit Limit.

    Many of the above mentioned amendments to Revamped Gold Deposit Scheme have already been notified by RBI by amending the GMS Master Direction No.DBR.IBD.No.45/23.67.003/2015-16 dated October 22, 2015 on 5th April, 2021.

    The key amendments to Indian Gold Coin Scheme include that SPMCIL will also mint and sell IGC through an online e-commerce platform, and via multiple channels including Airports, availability of IGC in both 999 and 995 purity, minting in smaller denominations, and flexibility to mint commemorative and other order gold coins.

    Important links/Documents related to R-GDS

    RBI Master Direction No.DBR.IBD.No.45/23.67.003/2015-16 - https://www.rbi.org.in/Scripts/BS_ViewMasDirections.aspx?id=10084

    Ministry of Finance, Press Release dated 5th November, 2015 - http://pibmumbai.gov.in/scripts/detail.asp?releaseId=E2015ND7

    List of Refineries granted License, Jewellers and A&H Centres qualifying to act as CPTCs - https://bis.gov.in/index.php/hallmarking-overview/gold-monetization-scheme/

    Ministry of Finance, GMS IFC https://dea.gov.in/gms2015

    Important links/ Documents related to R-GML

    RBI Master Circular on Loans and Advances - Statutory and Other Restrictions dated July 1, 2015 - https://m.rbi.org.in/Scripts/BS_ViewMasCirculardetails.aspx?id=9902#2312

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