Gold Monetisation Scheme

Why in news?

The medium term and long term government deposit (MLTGD) components of the Gold Monetisation Scheme (GMS) closed from March 26.

Key points:

• It has been decided to close the Gold Monetisation Scheme after examining its performance and emerging market conditions.
• No gold deposits presented at designated collection and purity testing centres, GMS mobilisation, collection and testing agents or designated bank branches under the components of GMS will be accepted.

Gold Monetisation Scheme (GMS):

• The Government of India launched the Gold Monetisation Scheme (GMS) in November 2015.
• Its objective was to bring the idle gold lying with the people into the banking system and reduce the country's import dependence.
• Under this scheme, people could deposit their gold and earn interest and get back the gold or its equivalent amount after the maturity period.

Key features of Gold Monetisation Scheme:

• Three types of deposit schemes:
  • Short Term Bank Deposit (STBD): for 1 to 3 years
  • Medium Term Government Deposit (MTGD): for 5 to 7 years (now discontinued)
  • Long Term Government Deposit (LTGD): for 12 to 15 years (now discontinued)
• Interest Rates:
  • Short term deposits carried interest as decided by the bank.
  • Medium and long term deposits carried interest as decided by the government (now discontinued).

Tax Benefits:

• Interest earned in this scheme was tax-free.
• There was no capital gains tax on the maturity amount of gold.