The government launched the gold monetization scheme in the year 2015 for mobilizing gold and facilitating its use for productive purposes, which will lead to the reduction of India’s dependability on gold imports. India is the second largest importer of gold. This movement will ease the government’s burden to bear the cost of borrowing and supplement the Reserve Bank’s gold reserve.
Gold Monetisation Scheme explained
The Gold Monetisation Scheme modifies the Gold Deposit Scheme to provide investors with a more attractive source of interest income that will allow them to save on storage costs. The GMS also provides security and will help investors to profit from deposits.
Gold investment can be a great way to hedge risk with a tangible, universally accepted asset. Under the scheme, you can deposit gold in any form – bars, coins, or jewelry. You also have the option to either take cash or gold on redemption. However, when you redeem your deposit, it will not come in the same form as before. You’ll only be able to avail of your money, bars, or gold coins.
The benefits of the gold monetization scheme
Easy and safe storage: Unlike traditional bank lockers, this scheme offers safe storage of the investor’s gold and doesn’t charge for the safekeeping. The investor not only gets guaranteed returns but can withdraw the deposit in gold or money at the given time.
Unproductive gold: GMS is in the process of making existing schemes more effective and broadening the scope for mobilizing gold that is held by households. Gold that is mobilized will also have a positive effect on gems and jewelry-centric industries, which currently contribute to the major share of India’s exports.
Tax benefits: GMS investors can enjoy some tax-related benefits. For example, earnings from the scheme are exempt from capital gains tax; this also applies to gold values that appreciate and interest gains.
Attractive interest rates: Customers who deposit their idle gold holdings for a fixed period can earn an average interest rate of 2.25-2.50%.
Get flexibility on redemption: As a gold depositor, you’ll have options on how you redeem your account. You can choose to take either cash or gold when your account is redeemed. However, the preferred option has to be mentioned at the time of the deposit.
Reduce the government’s reliance on gold imports: The government will be able to reduce its reliance on gold imports because it has mobilized more gold. This gold will also supplement the RBI’s (Reserve Bank of India) gold reserves and help in reducing the Government’s borrowing costs. Over time, this should also decrease India’s dependency on imported gold.
The Gold Monetization Scheme is a great way to invest in gold and earn a return on your investment. The scheme allows you to deposit your gold with the government and earn interest on it. You can also redeem your gold for cash when you need it. The scheme is a safe and secure way to invest in gold and earn a return on your investment.