India To Relaunch Gold Monetization Scheme as Government Seeks to Unlock Idle Bullion
If successful, the policy would gradually reduce the need to exchange rupees for dollars simply to satisfy domestic gold demand.
The world’s largest holders of physical gold are no longer asking whether gold has monetary value. They are increasingly asking how that monetary value can be put to work.
India Moves to Unlock Household Gold as Government Prepares Revamped Gold Monetization Scheme
India is preparing to relaunch its Gold Monetization Scheme with a redesigned framework that would, for the first time, allow jewelers to participate directly in collecting household gold deposits. Officials hope the changes will increase participation, reduce dependence on imported bullion, and bring a portion of the country’s vast privately held gold stock back into the formal financial system.
According to reports from Moneycontrol, The Economic Times, and The Times of India, the proposal has advanced following multiple meetings involving senior government ministers, the Reserve Bank of India (RBI), commercial banks, refiners, and representatives of the bullion industry. The revised scheme is expected to be announced ahead of the upcoming festive season, with August viewed as the likely launch window.
“Under the proposed framework, jewelers across the country may be included as Collection Partners in the revamped Gold Monetization Scheme.”
From Banks to Jewelers
The most significant change would allow jewelers to serve as collection and aggregation centers.
Rather than requiring households to work primarily through banks and Collection and Purity Testing Centers, jewelers would receive customer deposits, coordinate purity testing, and route the metal through authorized refiners and banking institutions while maintaining transparency throughout the process.
Industry participants believe jewelers’ longstanding relationships with customers could substantially improve participation compared with the original program.
In return, jewelers would receive service fees for mobilizing deposits, facilitating transactions, and conducting initial processing. Access to monetized domestic gold would also provide jewelers with a more dependable source of raw material, improve inventory management, and reduce financing costs.
Unlocking India’s Existing Gold
India is estimated to hold nearly 30,000 tonnes of privately owned gold, making it one of the largest above-ground gold repositories in the world.
Despite that enormous stockpile, the country continues to import hundreds of tonnes of gold annually.
The original Gold Monetization Scheme, introduced in 2015, generated only 39 tonnes of deposits over eleven years despite allowing deposits as small as ten grams.
Under the existing system, deposited gold is tested, melted, refined into 995-purity bullion, credited to a Gold Deposit Account, and earns interest paid in rupees. Upon maturity, depositors may receive either physical gold or the rupee value of their holdings based on prevailing market prices.
The revised framework seeks to dramatically expand participation by making the collection process more accessible through India’s nationwide network of jewelers.
Reducing Import Dependence
The proposal arrives as policymakers continue searching for ways to reduce pressure on India’s import bill.
The RBI recently reported that growth in gold imports slowed sharply during May, with imports estimated near $12 billion for the month. High gold prices and import duties have weighed on jewelry demand while continuing to create pressure on India’s current account.
Officials believe greater use of recycled domestic bullion could gradually reduce the country’s dependence on imported gold while creating a more efficient domestic supply chain.
