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All you wanted to know about Gold Monetisation Scheme & Gold Bonds

Government yesterday approved Gold Monetisation Scheme to reduce the demand of gold and make optimum use of gold lying ideal at households. The scheme has been launched to reduce the import of the yellow metal in the country. Currently India imports 1000 tonnes of gold annually.

As per government – stocks of gold are estimated to be about 20,000 tonnes, most of which is neither traded nor monetized.

What is Gold Monetisation Scheme?

It is a scheme that facilitates the depositors of gold to earn interest on their metal accounts. Once the gold is deposited in metal account, it will start earning interest. This can either be for short, medium or long term. By this one can deposit gold with authorized agencies and take advantage of the price escalation of gold as well as earn interest on the deposit.


How does the scheme work?

Ideal gold is deposited with authorized institutions. Qty of gold to be decided on the purity of gold and it can be in any form bullion or jewellery. Individuals and institutions can deposit as low as 30 gm of gold.

RBI to issue Gold Bonds:

The RBI will issue gold bonds on behalf of government with annual cap under this Scheme to be 500 gm per person.

These 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. Capital gains tax treatment will be same as for physical gold for individual investors. Amount raised via bond scheme to be used in lieu of govt borrowing.

Benefits to investors of Gold Bonds:

  • You save time, money and efforts and there is less risk involved in buying a gold bond than physical gold.
  • Interest to be given on Gold bond – but its taxable. No tax if the bonds are redeemed at maturity.
  • When you buy the bond you pay as per the current price of the gold and when you sell its as per the price then.

This will help government reduce import of gold in the nation which is already slowing down. This in turn will help government in reducing their deficit.

Government to soon implement this scheme, will write more details then. 

{ 2 comments… add one }
  • prudhvi October 17, 2016, 7:12 am

    As per my view trading in Gold is better than Gold Bonds. Bonds gives only 2.75% of interest we can get more than that by gold trading. Gold trading also didn’t have certain time bound as gold bonds have we can gain immediate returns when ever we want by trading. I used to trade in Gold by taking the service from SquareIndia Advisory Pvt Ltd which helped me to get better returns what ever the market conditions may be. This only happened by their experience and brief analysis. They also provided me with Live and Local Bullion Rates. So, i would like to suggest SquareIndia Advisory Pvt Ltd. 

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