Gold Monetisation Scheme (GMS): How Idle Gold Earns Interest
Last updated: 2026-11-13 · MockMentor
The Gold Monetisation Scheme (GMS), launched in November 2015 and revamped in 2021, lets households and institutions deposit idle gold with banks and earn interest. The aim is to put household gold to productive use and cut gold imports.
In one line: bank deposits made in gold instead of money, so that idle jewellery and coins can be lent to jewellers.
At a glance
| Item | Details |
|---|---|
| Launched | November 2015 (Revamped GMS 2021) |
| Who can deposit | Resident individuals, HUFs, trusts, firms, companies; not NRIs |
| Minimum | 10 grams of raw gold, no maximum |
| Banks | Only designated banks |
| Short-Term Bank Deposit | 1 to 3 years, 0.5% to 1% interest; continues |
| Medium and long-term deposits | Closed to new deposits from March 2025 |
| Tax | Interest and capital gains exempt |
How it works
Gold goes to a Collection and Purity Testing Centre, then a refiner, and is credited in grams of 995 fineness. Banks lend it to jewellers as Gold Metal Loans, so it re-enters the domestic supply chain instead of being imported.
India's three gold schemes
| Scheme | Purpose |
|---|---|
| Gold Monetisation Scheme | Mobilise physical gold |
| Sovereign Gold Bond | Paper gold as an alternative to buying physical gold (no new issues) |
| India Gold Coin | Domestic coins made from GMS gold |
Possible exam questions
- Why have gold mobilisation schemes had limited success in India?
- How does household demand for gold affect India's current account?
Complete notes in our courses: this page gives the essentials. The Super-Elite and Elite courses carry the full chapter with every update merged in, plus practice MCQs. Compare the courses.
More in Finance Ministry schemes
- National Pension System (NPS)
- Unified Pension Scheme (UPS)
- Atal Pension Yojana (APY)
- PM Vaya Vandana Yojana (PMVVY)
- PM Jeevan Jyoti Bima Yojana (PMJJBY)
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