General Knowledge

GOLD MONETIZATION SCHEME

  • The union Finance Minister Arun Jaitley announced several steps for monetizing gold in the Budget 2015-16 speech, one of them being Gold Monetization Scheme (GMS)
  • As per the Budget speech the stocks of gold in India were estimated to be over 20,000 tonnes but most of this gold is neither traded nor monetized
  • The Gold Monetization Scheme will replace the already existing Gold Deposit and Gold Metal Loan Schemes
  • Objectives of the Gold Monetization Scheme are as follows
  • To mobilize the gold held by households and institution in the country
  • To provide a push up to the gems and jewellery sector in the country by making gold available as raw material on loan from the banks
  • To be able to reduce the dependency on import of gold over time to meet the domestic demand

 Features of GMS are as follows

  • It facilitates the depositors of gold to earn interest on their metal accounts
  • Once the gold is deposited in metal account, it will start earning interest on the same
  • The banks would also be able to monetize the gold under this scheme
  • When a customer takes gold to deposit in a specified bank or agency the purity of the gold is determined by a preliminary test which includes melting the gold and checking with the consent of the customer
  • The minimum quantity of gold that can be deposited by a customer is set as 30 gms to encourage even small depositors
  • The deposited gold will lent by the banks to jewelers at an interest rate little higher than the interest paid to the customers
  • The tenure of gold deposits is likely to be for a minimum of 1 year. The customers will have a choice to take cash or gold on redemption as per the preference stated at the time of deposit