India's government is expected to announce a revamped Gold Monetisation Scheme within two weeks, sources say, with jewellers set to join banks as collection points for household gold. Analysts estimate that monetising even 5% of private holdings could unlock up to $90 billion in liquidity.
India's central government is likely to unveil a revamped gold monetisation scheme within the next two weeks, according to sources aware of the matter. The overhaul aims to pull idle household gold into the formal economy after a decade in which the original program monetised only a small share of the country's holdings.
Jewellers join banks as collection partners
The proposed framework may add jewellers across the country as Collection Partners in the revamped Gold Monetisation Scheme, letting them aggregate household deposits. Earlier, only banks were allowed to take part.
India's goldsmith and jewellery bodies pushed for the change, seeking structural ways to cut gold inflows without hurting domestic demand or the livelihoods tied to the sector. The move follows a call from Prime Minister Narendra Modi asking citizens to defer their gold purchases for a year; the gems and jewellery bodies have asked for a revamped scheme.
Why the original scheme stalled
Introduced in 2015, the GMS was meant to trim the current account deficit by curbing gold imports, encouraging investors to deposit gold in bank lockers and earn interest between 2.25% and 2.5% depending on the deposit's duration. By March 2025, after a decade, only 38 tonnes had been monetised against India's estimated holdings of 25,000 tonnes, and the government discontinued medium- and long-term deposits.
Mounting interest losses on the scheme were borne by the exchequer. According to Tradebulls Securities' Bhavik Patel: "Ultimately, the government was making a loss on the Scheme", because it paid appreciation costs plus 2% annual interest on an unhedged scheme. Structural reasons also weighed: families resist melting inherited jewellery for small returns, and many fear tax scrutiny on old household gold.
The liquidity prize
The upside is large. Choice Broking's Aamir Makda estimated that mobilising even 5% of India's private gold — around 1,250 tonnes — would equal $80 to $90 billion in internal liquidity. In theory, that could zero out gold imports for nearly two years, drastically reducing demand for US dollars and potentially causing the rupee to appreciate significantly.
Experts add that a working scheme could reduce import dependence and strengthen the formal gold economy, turning idle metal into productive national capital.
Source: Moneycontrol
Trading involves risk.
Risk Disclaimer
