The Central Government is expected to announce a revamped Gold Monetisation Scheme (GMS), according to sources. The official announcement may be made within the next two weeks. Sources said the revamped scheme could help mobilise more than 1,000 tonnes of gold in India.
Jewellers May Become Gold Collection Partners
Under the proposed framework, jewellers across the country may be included as “collection partners” in the revamped Gold Monetisation Scheme.
This would allow jewellers to collect and aggregate gold deposits from households. Under the earlier system, mainly banks were involved in the scheme.
“Under the proposed framework, jewellers across the country may be included as collection partners in the revamped Gold Monetisation Scheme, enabling them to aggregate household gold deposits,” the All India Jewellers & Goldsmith Federation (AIJGF) said.
Jewellery Industry Seeks Changes in Gold Monetisation Scheme
Goldsmith and jewellery associations in India have urged the government to revamp the scheme.
The industry is seeking structural changes that could reduce India’s dependence on gold imports without affecting domestic demand or the livelihoods of people working in the jewellery sector.
Analysts said that even if 5% of gold held by Indian households is monetised, it could generate liquidity of up to $90 billion.
India Has Huge Amount of Idle Gold
India is one of the world’s largest buyers of gold. However, industry bodies have pointed out that a large amount of gold remains idle in Indian households. They believe that significant economic value can be unlocked through a redesigned and properly regulated Gold Monetisation Scheme.
Gold Monetisation Scheme Was Launched in 2015
The government introduced the Gold Monetisation Scheme in 2015 to reduce the current account deficit by lowering India’s dependence on gold imports.
The scheme encouraged people to deposit their physical gold instead of keeping it unused. Under the scheme, eligible gold deposits could earn interest of around 2.25% to 2.5%, depending on the duration of the deposit.
For short-term deposits, depositors could receive either physical gold or the equivalent value in rupees at the time of withdrawal, subject to the scheme’s rules.
Only 38 Tonnes of Gold Monetised in 10 Years
Despite being in operation for nearly a decade, the Gold Monetisation Scheme received a limited response.
By March 2025, only around 38 tonnes of gold had been monetised under the scheme. This was very low compared with India’s estimated household gold holdings of around 25,000 tonnes. The government also discontinued medium-term and long-term gold deposits in March 2025.
Why Did the Gold Monetisation Scheme Fail?
One of the major reasons for the limited success of the scheme was the financial burden on the government.
The government was making a loss on the scheme. They had to pay any appreciation cost, as well as two percent annual interest, to incentivise investors.
According to experts, the scheme was not properly hedged. As a result, the government had to bear the increase in gold prices at the time of withdrawal, along with the interest paid to depositors.
Families Do Not Want to Melt Inherited Jewellery
Industry bodies have also highlighted several structural problems with the scheme.
Many Indian families do not want to melt old or inherited jewellery for a small financial return. Such jewellery often carries emotional, religious and family value.
There are also concerns about tax scrutiny and questions related to the documentation of old household gold.
“Banks have limited incentive to push the scheme aggressively because gold deposits do not provide enough commercial benefit or balance-sheet advantage,” AIJGF said.
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