Gold Monetization Scheme: Everything you need to know

By Team Gullak

Nov 13, 2024

4 min read

Is your gold sitting idle? Do you want to get more returns from your gold and want to make it work for you?

In this article, we will discuss one such scheme called Gold monetization scheme. We will understand how the scheme works, gold monetization scheme interest rate, pros and cons & compare it against other popular gold schemes.

What is Gold Monetization scheme?

The Gold monetization scheme(GMS) is a government initiative that allows you to earn extra interest on your idle gold. Under this scheme, you can deposit your gold at your home(like coins or jewellery) to banks. These banks convert this into bullion and lend it to jewellers. These jewellers in turn pay extra interest to the users on the leased gold.

Scheme details:

Gold monetization scheme interest rate: 2.25% p.a.(For the medium-term plan) or 2.5% (For the long-term plan)

Form of interest: INR

Tenure/Lockin period: 5-7 years(medium-term plan) or 15-17 years(long-term plan)

Minimum investment: 10gms

Transaction type: Existing gold at home

Gullak Gold+ as an alternative to earn Extra Interest

Gullak Gold+ is a gold investment scheme that allows you to grow your gold every year. Under this scheme, your gold gets leased to India’s biggest jewellers. These jewellers use your gold as working capital and provide you with extra 5% gold every year. So, if you would invest 100 gms today, it’ll become 105 gms in 1 year and 148 gms in 8 years, which is almost a 50% increase in gold quantity.

Scheme details:

Extra interest: 5% pa

Form of interest: gold grams

Tenure/Lockin period: None

Minimum investment: 0.5 gms

Transaction type: Fresh investment in gold on the Gullak app

Comparison: Gold Monetization scheme vs Gullak Gold+

Now that we have a deeper understanding of both the gold schemes, let us compare them under different parameters:

Table: Gold Monetization scheme vs Gullak Gold+

Pros & Cons of Gold monetization scheme

Pros: 1. If you have existing gold at your home, the Gold Monetisation scheme is an excellent way of reinvesting it. 2. Gold monetization scheme interest rate: If you want to earn extra interest on this idle gold, the 2.25% or 2.5% pa will aid with that. Cons: 1. Lock-in period: The Gold Monetisation scheme comes with long lock-in periods or 15-17 years. 2. Indians have huge sentimental attachment with physical gold(like jewelleries). Under the scheme, you wouldn’t be able to get your jewellery back even after the scheme ends.

Concluding thoughts on Gold monetization scheme

The Gold monetization scheme is a beneficial opportunity for people who are trying to get more out of their existing gold. However, the scheme has major drawbacks like you not being able to get your jewellery back & long lock-in periods.

On the flip side, while you need to make fresh investments with Gullak Gold+, you’ll be able to counter the drawbacks of the Gold monetization scheme. There are no lock-in periods and you get extra 5% gold compounded annually compared to the 2.5% simple interest that the Gold monetization scheme offers.