About Us News

Introduction of Gold Monetization Scheme introduced in India

Back | Print

On September 15, 2015 the Union Cabinet gave its approval for introduction of Gold Monetization Schemes (GMS) in India, as announced in the Union Budget 2015-16.

The objective of introducing the modifications in the schemes is to make the existing schemes more effective and to broaden the ambit of these schemes from merely mobilizing gold held by households and institutions in the country to putting this gold into productive use. The new scheme consists of the revamped Gold Deposit Scheme (GDS) and a revamped Gold Metal Loan (GML) Scheme.

The scheme will help in mobilizing the large amount of gold lying as an idle asset with households, trusts and various institutions in India and will provide a fillip to the gems and jewellery sector. GMS would benefit the Indian gems and jewellery sector which is a major contributor to India’s exports. In fiscal year 2014-15, gems and jewellery constituted 12% of India’s total exports and the value of gold items alone was more than US$13 billion (provisional figures).

The risk of gold price changes will be borne by the Gold Reserve Fund that is being created. The benefit to the Government is in terms of reduction in the cost of borrowing, which will be transferred to the Gold Reserve Fund. The mobilized gold will also supplement RBI’s gold reserves and will help in reducing the government’s borrowing cost. Over time, the scheme is expected to reduce the country’s dependence on the import of gold