Govt May Revamp Gold Monetisation Scheme: Report

The Central government is preparing to launch a revamped version of the Gold Monetisation Scheme (GMS), with an official announcement expected within the next two weeks, Moneycontrol reported.

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The updated framework is likely to introduce major changes to improve participation and unlock idle household gold.

A key proposed reform is the inclusion of jewellers as “collection partners” in the scheme. This would allow them to collect and aggregate household gold deposits, expanding the network beyond banks, which were the only authorised entities under the earlier version.

Industry bodies such as the All India Gem & Jewellery Domestic Council (AIJGF) have supported this move, saying it could significantly improve mobilisation.

The objective behind the revamp is to reduce gold imports and unlock the estimated value of dormant household gold without disrupting cultural ownership patterns or harming livelihoods linked to the jewellery sector.

Analysts estimate that even monetising just 5% of India’s household gold stock could release liquidity worth around $90 billion.

The push for reform comes amid renewed focus on gold demand management, following Prime Minister Narendra Modi’s recent appeal to citizens to defer gold purchases for a year.

India is among the world’s largest consumers of gold, which serves both as an investment asset and a cultural symbol. However, a large portion of this gold remains “idle” in households, prompting calls for better monetisation mechanisms.

The original Gold Monetisation Scheme, launched in 2015, aimed to reduce gold imports and improve the current account balance by encouraging people to deposit physical gold in banks and earn interest between 2.25% and 2.5%. Depositors could later withdraw either gold or its cash equivalent.

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Despite these incentives, the scheme saw limited uptake. By March 2025, only 38 tonnes of gold had been mobilised, compared to India’s estimated 25,000 tonnes of household gold.

The government also discontinued medium and long-term deposits due to low participation.

Experts say the scheme’s failure stemmed from structural and behavioural issues. Families are reluctant to part with inherited jewellery due to emotional, cultural, and religious value.

Concerns about taxation and documentation also discouraged participation. Additionally, banks had little incentive to actively promote the scheme due to limited financial benefits.

The revamped version aims to address these shortcomings and improve participation through broader institutional involvement and improved design.

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