Gold Monetization Scheme (GMS)

Gold Monetization Scheme is one of the scheme that have been launched by government of India and managed by Reserve bank of India.

Gold Monetisation Scheme  is a term deposit in gold.  Customers can deposit their  gold under GMS which will provide them safety, interest earnings and a lot more.

Customers can deposit their gold in the Medium & Long Term Govt. Deposit (MLTGD)Scheme. The Medium Term Government Deposit (MTGD) can be made for 5-7 years and Long Term Government Deposit (LTGD) for 12-15 Years. The deposit will be accepted by the Bank on behalf of the Central Government.

How it works: Under this Gold Monetization Scheme a customer who has Gold can deposit their gold in any form in a GMS account to earn interest as the price of the gold metal goes up.

Purpose: The purpose of this scheme is to reduce the import of Gold by India. will happen because the household gold will be mobilized as per this scheme and there will be more gold in the market.

Persons eligible for deposit: Resident Indians (Individuals, HUFs, Proprietorship & Partnership firms,Trusts including Mutual Funds/Exchange Traded Funds registered under SEBI(Mutual Fund) Regulations and Companies can make deposits under the
scheme. Joint deposits of two or more eligible depositors are also allowed.

Acceptance of deposits: The minimum deposit  shall be 30 grams of raw gold (bars,
coins, jewellery excluding stones and other metals). There is no maximum
limit for deposit.

Tenure of Medium Term Government Deposit (MTGD):
The Medium Term Government Deposit (MTGD) can be made for 5-7 years
and Long Term Government Deposit (LTGD) for 12-15 Years.

Rate of Interest for Medium Term Government Deposit (MTGD):
The current rate of interest by the Central Government are
(i) On medium term deposit – 2.25% p.a.
(ii) On long term deposit – 2.50% p.a.

Interest on MLTGD shall be calculated in Indian Rupees with reference to the
value of gold at the time of the deposit. Redemption of the deposit will be only
in INR equivalent of the value of gold as per then prevailing price of Gold.
Opening of gold

Deposit accounts :The opening of gold deposit accounts shall be subject to the same rules withregard to customer identification as are applicable to any other deposit
account. All KYC norms as prescribed by RBI shall be complied with.
Deposit of Gold: All deposits under the scheme shall be made at the CPTC. Customers also can deposit their gold directly with the refiners that have facilities to carry out final assaying and to issue the deposit receipts to the depositor.

Issuance of Certificate: The depositor shall produce the receipt showing the 995 fineness equivalent amount of gold issued by the CPTC to the designated branch, either in person or through post. On submission of the deposit receipt by the depositor, the designated branch shall issue the final deposit certificate on the same day or 30 days after the date of the tendering of gold at the CPTC, whichever is later.

The deposit under MLTGD will be accepted by the 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.

Payment of principles and Interest under MLTGD: Redemption of the deposit will be only in INR equivalent of the value of gold as per the prevailing price of gold.

In the case of MLTGD, the principal will be denominated in gold. The interest
on MLTGD shall be calculated in INR with reference to the value of gold at
the time of the deposit.

Lock-in period of MLTGD:
The minimum lock-in period as stipulated by RBI guidelines are as under:
i) A Medium Term Government Deposit (MTGD) is allowed to be withdrawn any time after 3 years.
ii) and a Long Term Government Deposit (LTGD) is allowed to be withdrawn any time after 5 years.

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