Gold Monetisation Scheme (GMS): Interest Rates, Eligibility & How It Works

If you have idle gold, the Gold Monetisation Scheme (GMS) lets you deposit a minimum of 10 grams with designated banks, earn interest on it, and benefit from income tax and capital gains tax exemptions — all while the government uses your gold for productive purposes.

If you have gold sitting in a locker doing nothing, the Gold Monetisation Scheme was designed for you. Through GMS, launched on November 5, 2015, by the Department of Economic Affairs under the Ministry of Finance, you can deposit your physical gold with designated banks and earn interest on it. The scheme exists so you and other gold holders can put idle gold to productive economic use instead of leaving it unused in a locker.

As a depositor, you also contribute to a secondary national goal: reducing India's reliance on gold imports, since the gold you mobilise can substitute for fresh imports in jewellery manufacturing and other uses. Remember that GMS replaced two older programmes, the Gold Deposit Scheme and the Gold Metal Loan Scheme, by combining their functions into one programme that is easier to understand and use today. If you're researching the gold monetisation scheme India has on offer, GMS is the current, active version of these earlier government efforts.

When you deposit gold under GMS, here's what you need to know about how much you can deposit, where you take it, and what you get back:

• Minimum deposit: You need at least 10 grams of raw gold at any one time. No maximum limit on the amount you can deposit
• Accepted gold types: You can deposit bars, coins or jewellery (any stones or other metals attached to your jewellery are removed and excluded before weighing)
• Where to deposit: You take your gold to a BIS-certified Collection and Purity Testing Centre (CPTC)
• What you get: You get a Gold Deposit Certificate, denominated in the equivalent of 995 fineness gold
• How interest is paid: You can choose to get interest in gold or in cash, depending on the type of deposit.

If you’re researching details of the gold monetisation scheme in 2025, you should know about a critical update. The scheme's structure has changed. Until recently, you could choose between three deposit components, i.e., Short-Term Bank Deposit (STBD), Medium-Term Government Deposit, and Long-Term Government Deposit. As of March 26, 2025, the government discontinued the Medium and Long-Term Government Deposit (MLTGD) components. Today, you can only deposit gold under the Short-Term Bank Deposit. If you come across content describing 5-year, 7-year, or 15-year GMS deposits, know that this no longer reflects what you can actually choose when you deposit gold now.

Also Read: Mutual Fund vs. Gold - What Is a Better Investment?

If you deposit gold under GMS today, the only thing you can do is use the STBD. You can choose a tenure of 1 to 3 years. Unlike the discontinued government deposits, when you deposit under STBD, your gold is accepted by the bank on its own account, not on behalf of the Central Government.

At this time, there is no set interest rate set by the government. Instead, each designated bank sets its own STBD rate based on gold lease rates around the world and the current state of the market. You get to choose whether you receive your interest in gold or in cash. Since rates vary by bank, it's worth comparing offers from a few designated banks before you decide where to deposit. Take your time with this comparison, since the rate you lock in affects your returns for the full tenure you choose.

Before the 2025 change, you could have chosen a Medium-Term Government Deposit (5–7 years) or a Long-Term Government Deposit (12–15 years) if you wanted a longer commitment. Under these options, your gold would have been accepted by the bank on behalf of the Government of India, rather than on the bank's own account.

The government discontinued both components effective March 26, 2025. If you opened an MLTGD deposit before this date, your existing deposit isn't automatically affected, but you should contact your bank directly to understand your specific redemption options and timeline going forward.

We won't guess about whether these parts will come back in the future because, at the time of writing, you can only use the STBD to make new deposits.

You won't find a single government-published GMS interest rate today. You can only access STBD right now, so the rate you earn is completely dependent on which bank you pick. Each designated bank sets its own STBD rate, which can change occasionally based on gold lease rates and market conditions. Before you deposit, check directly with your chosen bank for the rate currently on offer. This also lets you compare a few banks side by side and pick the most competitive rate available to you, rather than settling for the first bank you visit. Since your interest rate is locked in for your chosen tenure, it is worth taking the extra time to compare before you commit your gold.

You can deposit gold under GMS if you fall into one of these categories:

• You're a resident individual, depositing gold individually or jointly with someone else
• You represent a Hindu Undivided Family (HUF)
• You hold gold through a trust, including a mutual fund or exchange-traded fund registered with SEBI
• You're depositing on behalf of a company
• You represent a charitable institution
• You're depositing on behalf of the Central Government

One important exclusion you should know: if you're a Non-Resident Indian (NRI), you are not eligible to deposit gold under GMS. If you're an NRI looking to invest in gold from India, you'll need to consider other options, as GMS isn't available to you under the current rules.

If you do qualify under one of the categories above, your entry requirement is simple: you need a minimum of 10 grams of raw gold at any one time, and there's no upper cap on how much you can deposit. Whether you're depositing 10 grams or 10 kilograms, the same eligibility rules apply to you.

Here's precisely what you need to do, step by step:

1. Locate a BIS-certified CPTC near you: You'll find your nearest Collection and Purity Testing Centre, where your gold is assessed before you can deposit it under the scheme.
2. Send in your gold for purity testing: Send in your bars, coins or jewellery. If your jewellery has stones or other metals attached, they will be removed and excluded from the weight for testing.
3. Get a provisional receipt: When the testing is done, you get a receipt that confirms the weight and purity reading.
4. Accept provisional valuation and open Gold Savings Account: If you accept the provisional valuation, you open this account with your chosen designated bank.
5. Get your Gold Deposit Certificate: Your bank will issue a certificate for gold of 995 fineness in terms of what you deposited.
6. Start earning interest: From here, you start earning interest as per the rate and terms you agreed with your bank at the time of deposit.

Each step is straightforward on its own, but plan for the purity testing stage to take some time, since your gold needs to be properly assessed before you can move forward with opening your account.

When your STBD deposit matures, you can choose to be repaid in gold (the equivalent weight) or in cash, calculated at the gold price prevailing at the time you redeem.

If you need your gold back before maturity, you do have the option of premature redemption, but it comes with conditions you should know upfront. There is a lock-in period, which for STBD is usually the first year, during which you can't take any money out. Once the lock-in period is over, you can withdraw early, but your bank will levy a penalty as per the terms and conditions.

You should also know about special rules that apply when things happen that are out of your control. For example, the RBI has informed you about certain rules that apply prematurely if you die or use your gold deposit as collateral for a loan and then fail to repay it. Because these terms vary between banks, review your specific bank's documentation carefully before you deposit, so you know exactly where you stand if you ever need to exit early.

When you deposit gold under GMS, you get three distinct tax advantages:

• Your interest is tax-free: Any interest you earn on your GMS deposit is exempt from income tax under the relevant provisions of the Income Tax Act.
• Capital gains tax-free on redemption: Any capital gains you make on redemption of your GMS deposit are exempt from capital gains tax.
• You pay no wealth tax: The gold you deposit under GMS doesn't attract wealth tax either.

Remember that tax laws can change, and how these exemptions affect you will depend on things like how much gold you own, how you got it, and your overall tax situation. Before you deposit, it's worth speaking with a tax adviser to understand exactly how these exemptions will apply to you, so you can plan your deposit with full clarity on what you'll actually take home.

If you're deciding between depositing your physical gold under GMS or buying paper gold through Sovereign Gold Bonds (SGBs), here's how the two compare for you:

Your right choice depends on what you're starting with. If you already hold physical gold and want it to start earning rather than sitting idle, GMS works in your favour. If you want gold exposure as an investment without holding any physical metal yourself, SGBs suit you better.

Before you commit your gold, you should weigh these trade-offs:

• You give up physical possession: Once you deposit your gold, it's no longer in your hands. If you're holding gold for sentimental or ornamental reasons, this is a real trade-off for you to consider.
• You might lose some weight: Your gold may lose some weight when tested for purity, especially if your jewellery has stones, enamel or an alloy content that is removed before weighing.
• Your interest rate depends entirely on your bank: Since the government doesn't set STBD rates, your return depends on which designated bank you choose and the rate they're currently offering you.
• You can't participate if you're an NRI: If you're a Non-Resident Indian, GMS simply isn't available to you, regardless of how much gold you hold.
• You have fewer tenure options than before: With MLTGD discontinued, you can no longer choose a multi-year government deposit. You're limited to the 1–3-year STBD today.

If you've inherited gold or spent a lot of time collecting jewellery, coins, or bars, GMS is an easy way to start making money on it without having to sell it all at once.

Some examples of larger gold reserves are a trust, a mutual fund, an ETF registered with SEBI, or a company that keeps gold on hand. With GMS, you earn a return on an asset that wouldn't normally earn one, and you can still choose to redeem in gold.

When you deposit gold under GMS, it doesn’t just stay in your bank – it actively circulates in the economy through the Gold Metal Loan (GML) link. After you deposit your gold, your bank can lend that same gold to jewellers under GML. Jewellers use this borrowed gold as raw material for manufacturing and repay the loan in gold or its equivalent value once they have sold the finished jewellery.

This is the mechanism that connects your individual deposit to the scheme's larger economic purpose: it's how your idle gold actually gets converted into productive use, supporting India's jewellery manufacturing industry and reducing the country's need for fresh gold imports.

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