Things you should know about – Gold Deposit Scheme

Govt. of India has announced Gold Deposit Scheme recently. India is the largest consumer of the gold and Major part of that is imported. A huge amount of India’s wealth is lying idle in form of gold and it is not productively contributing to the India’s growth story. To tackle this, Government of India has come out with the two new schemes primarily targeted at tapping the idle gold with Indian households and institutions and further giving an alternative for actually buying the physical gold. The two schemes are Gold Deposit Scheme and Gold Bond Scheme. Gold Bonds will be issued by RBI and Gold Deposits will be implemented through Banks.

gold scheme

Gold Deposit Scheme: – You can open a account with a bank with KYC norms and deposit gold in any form coins, bars or ornaments. You will be provided with a provisional receipt. Bank will then forward that gold to refineries where it will be melted and hallmarked for purity with XRF machine. At this point if the depositor is not happy with the valuation he can take the gold back by paying nominal charges. If valuation is agreed upon, Gold deposit will be issued by a nodal branch. The whole process will take around 90 days. Depositor will be getting interest on his gold deposits i.e. 2% to 3 %. On maturity depositor can either have gold or cash as per his preference. The Gold price on the day of maturity will be the basis of repayment.


Eligibility :- Any Individual, HUF, Trust and Company
Tenure :- The deposit tenure will be 3,4,or 7 years
Interest rate: – 2% to 3 %
Repayment: – In Gold or equivalent amount of rupees.

Loan Facility against gold deposit
Tax benefits- exemption from wealth tax, income tax and capital gain tax.
Generation of income from gold instead of paying for the safe keeping in locker.
Can achieve safety, income and liquidity of gold asset at one go.


Minimum quantity 30 gms gold
Penalty for premature payment before lock in period of 1 year
Government’s Role: – Government: Government also wants to mint “India Gold Coins” with this gold which will be then given to jewelry makers that will curb gold imports. Government will bear the risk of price appreciation in gold prize in future. Govt. will have to ensure the smooth functioning of the set-up.


On ETF’s :- Gold deposits have advantage over ETF’s as ETF’s charge management fees and is also taxable for capital gains. Whereas the gold deposits will not attract any tax liability rather it will generate income for the depositor.

In conclusion, it’s a good option to mobilize your gold investments in productive use and earn. As far Financial Planning principles are concerned gold as asset class is should have maximum asset allocation of 5 %.

Reproduced with permission from

About the Author
Shri Prakash Praharaj
 topped the university during his graduation and post graduation in Commerce and has been awarded two gold medals. By training, he is an MBA and he has been awarded a Diploma in Treasury, Investment and Risk Management besides CAIIB from the Indian Institute of Bankers. He is also a CERTIFIED FINANCIAL PLANNER CM and a Certified Personal Financial Adviser with 30 years of experience in the financial services sector under his belt, which include service at financial sector pillars like the Reserve Bank of India, United India Insurance Company, State Bank of India and SBI Life Insurance Company.

During the year 2010, he promoted Max Secure Financial Planners to provide fee-only financial planning advisory services and promote financial literacy. Today, he is a SEBI-registered Investment Adviser and helps plethora of investors to plan their financial lives and achieve their aspirations.

Mr Praharaj is listed on and you can ask him a query at

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