Definition
Gold Monetisation Scheme
The Gold Monetisation Scheme lets households and institutions deposit idle gold with banks to earn interest and bring private gold into the economy.
Indian households hold vast quantities of physical gold that sit idle. The Gold Monetisation Scheme allows them to deposit gold with banks under short, medium or long-term plans, earning interest while the gold is melted and recirculated, reducing the need for imports.
The scheme aims to mobilise this dormant wealth productively and ease pressure on the current account from gold imports. It complements the Sovereign Gold Bond Scheme, which offers a paper alternative to buying physical gold, as part of a broader strategy to reduce reliance on imported bullion.
Related terms
- Government Securities (G-Sec)Government securities are tradable debt instruments issued by the central or state governments, considered virtually free of credit risk in rupee terms.
- Reserve Bank of India (RBI)The RBI is India's central bank and monetary authority, responsible for issuing currency, setting policy rates, regulating banks and managing the government's debt.
- Sovereign Gold Bond SchemeThe Sovereign Gold Bond Scheme lets investors hold gold in paper form as RBI-issued bonds denominated in grams, earning interest plus price-linked returns.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.