Gold Monetisation Scheme Current Affairs - 2020

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RBI tweaks Gold Monetisation Scheme

The Reserve Bank of India (RBI) has made changes with the Gold Monetisation Scheme (GMS) to allow charitable institutions, central government entities and state government entities to deposit gold under GMS.

Now the entities allowed to deposit gold under the scheme include Resident Indians [Individuals, HUFs, Proprietorship & Partnership firms, Trusts including Mutual Funds/Exchange Traded Funds registered under SEBI (Mutual Fund) Regulations, Companies, charitable institutions, Central Government, State Government or any other entity owned by Central Government or State Government].

Why the ambit to deposit gold under the scheme was expanded?

The reasons for expanding the ambit are:

  • To bring out the unaccounted gold with the charitable institutions.
  • To enable the government agencies to deposit gold which they had confiscated.

Gold Monetisation Scheme

The Gold Monetisation Scheme was launched with the tagline Earn, while you secure. The scheme provides the dual benefit of, interest (denominated in gold) on the gold deposited and an option of encashing the gold at maturity. All the scheduled commercial banks except the RRBs are authorised to implement the scheme.

The gold deposits can be made under 3 term deposit plans:

  • Short term:1 to 3 years
  • Medium term:5 to 7 years
  • Long term:12 to 15 years

Short-term deposit rates are decided by the banks concerned, while the medium and long-term deposit interest rates are decided by the Central Government.

The minimum deposit one can make in a gold monetisation scheme is 30 grams of any purity and there is no maximum limit. The capital gains from the scheme are exempted from capital gains tax, wealth tax and income tax.

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Union Government launches Three Gold Schemes

Prime Minister Narendra Modi launched three gold related scheme viz Gold Monetization Scheme (GMS), Sovereign Gold Bond Scheme (SGBS) and Indian Gold Coins (IGC).

These ambitious schemes were launched to reduce the physical demand for gold and fish out 20,000 tonnes of the precious metal lying idle with households and institutions.

Gold Monetisation Scheme (GMS) 2015

  • GMS 2015 will offer option to resident Indians to deposit their precious metal and earn an interest on it and will replace the existing Gold Deposit Scheme (GDS) 1999.
  • All residents can invest in this scheme but are subjected to Know Your Customer (KYC) Scheme.
  • Scheme tagline: Earn, while you secure.
  • Implementation: As per Reserve Bank of India (RBI) directives all Scheduled Commercial Banks (excluding Regional Rural Banks) will implement GMS 2015.
  • Deposit limit: Minimum deposit at any one time of raw gold in the forms of bars, coins, jewellery excluding stones and other metals is 30 grams with 995 fineness. There is no maximum limit for the deposit.
  • Tenure: Banks will accept gold deposits under the Short Term of Bank Deposit (STBD) of 1-3 years, Medium (5-7 years) and Long (12-15 years).
  • Principal and Interest of the deposit: Banks are free to fix the interest rates and it will be denominated in gold.

Sovereign Gold Bond Scheme (SGBS) 2015

  • Seeks to shift part of physical gold in form of bars and coins for investment into Demat (Dematerialised) gold bonds in order to reduce the demand for physical gold.
  • These gold bonds are interest bearing and will be payable in terms of grams of gold.
  • Scheme tagline: Invest wisely. Earn Safely.
  • Minimum investment: 2 grams of physical gold; Maximum investment: 500 grams.
  • Issuing Bonds: RBI on behalf of Union Government will issue the Gold bonds in the denominations of one gram and its multiples.
  • Tenure of Gold bonds: 8 years is maximum tenure. But there is exit option from 5th year can be exercised on interest payments dates.
  • Tradable and Exchangeable: These bonds are available in DEMAT and paper form. It can be tradable in stock exchange and can be used as collateral for loans.

Indian Gold Coin 2015

  • It is Indian’s first ever Indian gold coin and bullion to be officially issued by Union Government.
  • The gold coins will bear national emblem Ashok Chakra on one side and Mahatma Gandhi’s engraved image on the other side.
  • Denominations: The coins will be available in denominations of 5 and 10 grams and a 20 gram bullion.
  • Available at: 125 Metals and Minerals Trading Corporation (MMTC) of India outlets across the country.
  • These coins and bullion are easily liquidated.

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