CA Deepak Aggarwal

Summary of Gold Monetization Scheme (GMS) 2015 as announced by RBI Master Direction No.DBR.IBD.No.45/23.67.003/2015-16 Dated- October 22, 2015

Resident Indians (Individuals, HUF, Trusts including Mutual Funds/Exchange Traded Funds registered under SEBI (Mutual Fund) Regulations and Companies) are eligible for this scheme.

♣ Joint deposits of two or more eligible depositors are also allowed under the scheme and the deposit in such case shall be credited to the joint deposit account opened in the name of such depositors. The existing rules regarding joint operation of bank deposit accounts including nominations will be applicable to these gold deposits

♣ The minimum deposit at any one time shall be raw gold (bars, coins, jewellery excluding stones and other metals) equivalent to 30 grams of gold of 995 fineness. .

This Clause is amended to Exclude the Condition of 995 Fitness vide Notification No. DBR.IBD.BC.52/23.67.003/2015-16 Dated-03.11.2015.

♣ No upper cap of deposit under this scheme.

♣ The gold will be accepted at the Collection and Purity Testing Centres (CPTC) certified by Bureau of Indian Standards (BIS) and notified by the Central Government under the Scheme.

♣ The Deposit Certificates will be issued by banks in equivalence of 995 fineness of gold.

♣ The principal and interest of the deposit under the scheme will be denominated in gold.

♣ The designated banks will accept gold deposits under the Short Term (1-3 years) Bank Deposit (STBD) as well as Medium (5-7 years) and Long (12-15 years) Term Government Deposit Schemes.

♣ Short term gold deposits will be accepted by the banks on their own behalf.

♣ The designated banks are free to fix the interest rates on short term deposits. The interest shall be credited in the deposit accounts on the respective due dates and will be withdrawable periodically or at maturity as per the terms of the deposit.

♣ Redemption of principal and interest at maturity will, at the option of the depositor be either in Indian Rupee equivalent of the deposited gold and accrued interest based on the price of gold prevailing at the time of redemption, or in gold. The option in this regard shall be made in writing by the depositor at the time of making the deposit and shall be irrevocable.

♣ There will be provision for premature withdrawal subject to a minimum lock-in period and penalty to be determined by individual banks. Provided that any premature redemption shall be in Indian Rupee equivalent or gold at the discretion of the designated bank.

♣ Medium & long term gold deposits will be accepted on behalf of the central government. Redemption of the medium & long term gold deposit including interest accrued will be only in Indian Rupee equivalent of the value of the gold and accumulated interest as per the price of gold prevailing at the time of redemption.

♣ Interest on deposits under the scheme will start accruing from the date of conversion of gold deposited into tradable gold bars after refinement or 30 days after the receipt of gold at the CPTC or the bank’s designated branch, as the case may be and whichever is earlier.

♣ During the period from the date of receipt of gold by the CPTC or the designated branch, as the case may be, to the date on which interest starts accruing in the deposit, the gold accepted by the CPTC or the designated branch of the bank shall be treated as an item in safe custody held by the designated bank.

♣ The opening of gold deposit accounts will be subject to the same rules with regard to customer identification as are applicable to any other deposit account

♣ Depositors who do not already have any other account with the designated bank, shall open a gold deposit account with the designated banks with zero balance at any time prior to tendering gold at the CPTC after complying with KYC norms as prescribed by Reserve Bank of India.

♣ The designated banks may sell or lend the gold accepted under STBD to MMTC for minting India Gold Coins (IGC) and to jewellers, or sell it to other designated banks participating in GMS. The gold deposited under MLTGD will be auctioned by MMTC or any other agency authorised by the Central Government and the sale proceeds credited to the Central Government’s account with the Reserve Bank. The entities participating in the auction may include the Reserve Bank, MMTC, banks and any other entities notified by the Central Government. Banks may utilise the gold purchased in the auction for purposes indicated above.

♣ Complaints against designated banks regarding any discrepancy in issuance of receipts and deposit certificates, redemption of deposits, payment of interest will be handled first by the bank’s grievance redress process and then by the Reserve Bank’s Banking Ombudsman.

♣  The exact date of implementation of scheme is yet to be notified by RBI.

(Author can be reached at [email protected])

More Under Fema / RBI


  1. C.A. M. Lakshmanan says:

    Whether the interest earned is taxable? If so whether on accrual or receipt basis?
    Whether the depositors will get notice from the I.T. Department to explain the source? Whether it is mandatory to disclose the gold deposits made in the ‘Income Tax Return’ ?
    The scheme will be attractive if the interest is exempt form tax and it will be more attractive if amnesty is given for the gold to be deposited i.e. no questions will be asked for the source of the gold.
    Another drawback in the scheme is that the jewellery deposited will lose it’s design and it may be melted to ascertain the purity and as such the depositors will lose the money they have spent in making charges and wastage.

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