Moneycontrol
Last Updated : Sep 09, 2015 05:17 PM IST | Source: Moneycontrol.com

What is Gold Monetisation Scheme: All you need to know

Finance minister Arun Jaitley said the Gold Monetisation Scheme will channelise country's idle gold assets. So how does the scheme work?


The Cabinet on Wednesday approved The Cabinet today approved Gold Bond and Gold Monetisation schemes to reduce the metal's demand in physical form and fish out idle gold lying with households and other entities. The Gold Bond scheme will have an annual cap of 500 grams per person and such bonds would be issued for a period of 5-7 years.

The Budget 2015-16 had proposed to launch a Sovereign Gold Bond (SGB) scheme to develop a financial asset as an alternative to gold. Speaking to the Press, Finance Minister Arun Jaitley said the Gold Monetisation Scheme will channelise country's idle gold assets.

So how does the scheme work?

Here's what you need to know:



  • Idle gold can be depositd in banks for either short, medium or long term

  • Depositors of gold will earn interest on their metal accounts

  • Quantity of gold to be credited will depend on the purity of gold.

  • The scheme will let individuals buy gold bonds instead of physical gold

  • Gold can be in any form, bullion or jewellery

  • individuals and institutions can deposit as low as 30 gm of gold

  • Mobilised gold will be used in auctioning and replenishing RBI's gold reserves





Soverign Gold Bond Scheme




  • The RBI will issue gold bonds on behalf of government

  • Annual cap under this Scheme to be 500 gm per person

  • Such bonds would be issued for a period of 5-7 years.

  • The bonds will be issued in 2, 5 and 10 grams of gold or other denominations

  • Interest on gold bonds to be decided by govt from time to time

  • On maturity, redemption will only be in rupees

  • Redemptions can be done through banks, NBFC and Post Offices

  • Capital gains tax treatment will be same as for physical gold for individual investors

  • Amount raised via SGBS to be used in lieu of govt borrowing

  • Gold Reserve Fund to take care of risk in increase of gold price

  • Risk of increase in gold price to be borne by government

  • Depositor to be given option to roll over bond for 3 years or more if gold price falls

  • Exemption for capital‎ gains on redemption of SGB will be considered in the next 2016-2017
First Published on Sep 9, 2015 02:32 pm
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