Pradhan Mantri Gold Monetisation Scheme (Complete Details)
Pradhan Mantri Gold Monetization Scheme
This Scheme was launched by the Prime Minister Narenda Modi on 5th November 2015. The scheme is designed in a way that it would provide a means in helping you earn interest on your unused gold that mostly lies idle in your bank lockers. Down the line, the Gold Monetization Scheme is a new tool of deposits that ensures mobilization of gold that various families and institutions in India claim to possess. It is expected from this Gold Monetisation Scheme that it would turn gold into a productive asset in our country.
This new gold scheme is also modified form of the existing Gold Deposit Scheme (GDS) and Gold Metal Loan Scheme (GML) run by the Government of India. Pradhan Mantri Gold Monetisation Scheme also claims to replace the existing Gold Deposit Scheme from 1999.
The Idea Behind Gold monetization Scheme
• A huge amount of gold nearly 20,000 tons is altogether held by the Indian Household and Institutions whose value goes upto $1 trillion. This figure makes more than 50% of the Nations’ GDP.
• Mobilization of this gold can result in significant drop in the gold import requirements of India. This will provide more money for the boosting up of the country’s economy.
• With the increase in liquidity through gold monetization scheme, it can be easily used up in the sectors demanding huge improvements such as health care, education, transport and infrastructure development, repayment of international debts etc.
Propositions By The Gold Monetisation Yojana
• The Gold held by Indian institutions and households will be mobilized.
• Making the preserved gold to jewelers and banking institutions.
• Through the mobilizing of the existing gold, there would be a significant reduction in the Indian gold imports.
• Improvements in the market liquidity.
• Conversion of gold into a secured form of performing asset.
Benefits of Gold Monetisation Scheme
• Gold deposition under this scheme can be as low as 30gm.
• Interest rate provided on this gold under the scheme would range 2.25%-2.5%.
• The short term deposit is from 1-3 years, medium term from 5-7 years, long term from 12-15 years.
• The short term gold deposits can also be redeemed in the form of money according to the current rate, if the depositor wishes to do so.
• There is no maximum limit on the deposition of gold under the Gold Monetisation Scheme.
• This deposited gold will be freed from any kind of income tax, wealth tax etc.
How Banks Utilize Gold Reserves
• Lending to the Jewelers
• Invitation to Foreign Currency Inflow
• Usage in meeting the SLR and CRR requirements
How To Apply For Gold Monetisation Scheme
The Government of India has drafted a strategized plan to implement this Gold Monetisation Scheme. The components of the drafted plan is given as follows:
• The owner of the gold, be it an individual or any institution has be open a bank account with a bank. The account has to be a Gold Savings Account.
• The gold possessed in the form of Jewelry or the coins has to be handed over the Assaying centres.
• These assaying centre will then check this deposited gold for purity and give the owners a receipt of the same.
• Now, the assaying centre after analysis will give information to the bank about the value of the gold that needs to be transferred in the Gold Savings account of the depositor.
• After this procedure, the bank will send all the gold, be it in the form of jewelry or coins to the refineries to convert them into gold bricks for the purpose of uniform storage.
• The refineries will send the gold in the form of bricks to the jewelers as and when instructed by the bank.
• The banks will no longer sell the gold to the jewelers. All it would do is loaning out the gold to jewelers that they will later repay with the interest.
• As the Gold savings Account is acting as an investment account for the customers. It will have a said maturity period. The maturity period will depend upon the chosen period by the customers according their needs.
• After the maturity period is over, the bank will return the gold to the customers along with the interest. The interest earned by the customer on their gold will be paid by the bank in the form of gold itself. It would not be a payment of cash.