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RBI amends Gold Monetisation Scheme to make it more attractive

Jun 8, 2018 13:24 IST
RBI amends Gold Monetisation Scheme to make it more attractive

The Reserve Bank of India (RBI) on June 7, 2018 amended the Gold Monetisation Scheme, 2015 (GMS) with an aim to enable people to open a gold deposit account hassle-free.

Short term deposits

• From now onwards, the short-term deposits will be treated as bank's on-balance sheet liability.

• These deposits will be made with the designated banks for a short period of 1 to 3 years.

• Deposits can also be allowed for broken periods such as for 1 year 3 months or for 2 years 4 months 5 days.

• The rate of interest payable in the case of deposits, for maturities with broken periods, will be calculated as the sum of interest for the completed year plus interest for the number of remaining days.

Medium and Long Term Government Deposits


Medium Term Government Deposit (MTGD)

Long Term Government Deposit (LTGD)


MTGD can now be made for 5 to 7 years

LTGD can be made for 12 to 15 years

Rate of interest

2.25% p.a.

2.50% p.a.

Minimum lock-in period

These deposits can be withdrawn any time after 3 years.

These deposits can be withdrawn any time after 5 years.

Interest on premature withdrawal

Sum of Actual market value of the gold deposit on the day of withdrawal and Interest payable on the value of the gold at the time of deposit.

Sum of Actual market value of the gold deposit on the day of withdrawal and Interest payable on the value of the gold at the time of deposit.

Note: The duration and rate of interest on Medium and Long Term Government Deposits will be decided by Central Government and will be notified by Reserve Bank of India from time to time.

The periodicity of interest payment on these deposits is annual and will be paid on March 31 every year. A depositor will have an option to receive payment of simple interest annually or cumulative interest at the time of maturity. This option can be exercised at the time of deposit.

Redemption of principal at maturity

• In the case of Medium and Long Term Government Deposits (MLTGD), the redemption of principal at maturity will be either in rupees equivalent of the value of deposited gold at the time of redemption, or in gold, it depends upon preference of the depositor.

• However, any pre-mature redemption of MLTGD shall be only in rupees.

• In case of redemption of the deposit in gold, an administrative charge of 0.2 percent of the notional redemption amount in rupees will be collected from the depositor.

• The interest accrued on MLTGD will be calculated with reference to the value of gold in terms of rupees at the time of deposit and will be paid only in cash.

Handling charges

The designated banks will be paid handling charges such as charges for gold purity testing, refining, transportation, storage and any other relevant costs for Medium and Long Term Government Deposits at a flat rate of 1.5 percent and commission at the rate of 1 percent of the amount equivalent to the amount of gold mobilised under the scheme.

Gold Monetisation Scheme

In 2015, the government launched the Gold Monetisation Scheme with the objective of mobilising the gold held by households and institutions in the country.


The Gold Monetisation Scheme modifies the existing ‘Gold Deposit Scheme’ (GDS) and ‘Gold Metal Loan Scheme (GML). It is intended to facilitate the use of gold for productive purposes, and in the long run, to reduce country’s reliance on the import of gold.

Acceptance of deposits

The minimum deposit at any one time shall be 30 grams of raw gold, be it bars, coins, jewellery excluding stones and other metals.

There is no maximum limit for deposit under the scheme.

All gold deposits under the scheme, whether tendered at the CPTC or the designated branches, shall be examined at CPTC.

Types of deposits

There are two different gold deposit schemes:

Short Term Bank Deposit (STBD): The short term deposits are treated as bank’s liability on balance sheet.

Medium and Long Term Government Deposit (MLTGD): The deposits under this category are accepted by the designated banks on behalf of the Central Government. The receipts issued by the CPTC and the deposit certificate issued by the designated banks shall state this clearly.

Opening of gold deposit accounts

  • The opening of gold deposit accounts is subjected to the same rules with regard to customer identification as applicable to any other deposit account.
  • Depositors who do not already have any other account with the designated bank, can open a gold deposit account with the designated banks with zero balance at any time prior to tendering gold at the CPTC after complying with KYC norms.

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