Introduction of Gold Monetization Schemes
Gold Monetization Scheme
The Union Cabinet chaired by Hon’ble Prime Minister, Shri Narendra Modi gave its approval for introduction of Gold Monetization Schemes (GMS), as announced in the Union Budget 2015-16.
Objective of the Gold Monetization Schemes
The objective of introducing the modifications in the schemes is to make the existing schemes more effective and to broaden the ambit of the existing schemes from merely mobilizing gold held by households and institutions in the country to putting this gold into productive use. The long-term objective of the scheme is to reduce the country’s reliance on the import of gold to meet domestic demand.
Benefits of the scheme
GMS would benefit the Indian gems and jewellery sector which is a major contributor to India’s exports. The mobilized gold will also supplement RBI’s gold reserves and will help in reducing the government’s borrowing cost.
The revamped Gold Deposit Scheme (GDS) and the Gold Metal Loan (GML) Scheme involves changes in the scheme guidelines only. 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 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. Over the course of time this is also expected to reduce the country’s dependence on the import of gold. The new scheme consists of the revamped GDS and a revamped GML Scheme.
For tenure, interest rate and redemption conditions under revamped Gold Deposit Scheme andGold Metal Loan scheme, please refer to the link mentioned below:
Dr. S P Sharma
Chief Economist & Director-Research