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Introduction

The Gold Monetisation Scheme was launched by the Government of India in 2015 to encourage people to utilize their unused gold. Under this scheme, one can deposit their unused gold in any form in a GMS account to earn interest.

Did you know that Indian households hold gold amounting to about 20,000 tonnes, which makes them the largest consumer of gold in various forms? Government introduced this scheme to give an opportunity to customers to monetize this idly lying gold. Various commercial banks have been authorized to accept gold deposits from its customers under this scheme.

Indian Overseas Bank introduced their version of this scheme as IOB Revamped Gold Deposit Scheme (IOB R-GDS). 

Under this scheme, customers can deposit their gold with the bank in a GMS account (Gold Monetisation Scheme) and earn interest against the value of gold deposited. One has to understand that the deposited gold is sent to the CPTC for assaying and determining the actual value of the gold deposited. The CPTC will issue a receipt declaring the weight of standard gold of 995 fineness. This amount of gold is deposited in the customers account and accrues interest annually. Upon maturity, the customer can redeem the value of gold either in the form of cash or gold coins.

Salient features of the IOB Revamped Gold Deposit Scheme (IOB R-GDS)

Indian Overseas Bank Gold Deposit Scheme

Eligibility Deposits can be made by 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). The account can also be opened jointly by two or more eligible depositors. In such cases, the interest shall be credited to the joint deposit account opened in the name of such depositors.

How much gold can I deposit? – You can deposit a minimum of 30 grams of gold of 995 finesse at a time. This gold can be in the form of bars, coins, jewelry excluding stones other metals.

How do I open the Gold Deposit Account with IOB?

One can open this account in any authorized IOB branch. Currently, this facility is available in the following branches of IOB:

Branches Authorised to Accept Deposits under Gold Monetization Scheme

(With Prior Approval from PMS, CO)

Sr. No.Branch NameBranch Code

1.

Tirupati

433

2.

Fort, Mumbai

14

3.

Janpath

65

4.

Kozhikode

41

Steps involved in the account opening: 

There are two steps involved in opening this account: 

Step 1: Once the customer deposits the gold with the bank, it is sent to the CPTC (Collection and Purity Testing Centre) for testing. After assaying the gold, the CPTC will issue a receipt declaring the weight of standard gold of 995 fineness.

Step 2: The Gold Deposit Account is opened in the IOB branch based on the CPTC evaluation. The 995 fineness equivalent amount of gold as determined by the CPTC will be final and this amount of gold will be taken as the final deposit amount in the account on which interest will be calculated.

Types of Gold Deposit Accounts with IOB

There are 2 types of account to choose from based on your needs: 

  1. Short Term Bank Deposit (STBD) – Has short term deposits of 3 years and a minimum lock-in period of 1 year
  2. Medium and Long Term Government Deposit (MLTGD) – This comes with a medium-term of 5- 7 years or a long term of 12-15 years or for such period as may be decided from time to time by the Central Government.

Interest Rates on the Gold Deposits

Interest rates for short term accounts are decided by IOB and are given in the table below. It is subject to change from time to time.

Quantity of GoldTenure PeriodRate of Interest (% p.a.)
30 grams and above1 year to 3 years0.25 % p. a

For medium and long term accounts, the interest rates are decided by the government in consultation with RBI and subject to change from time to time. The current rate of interest as notified by the Central Government are as under:

(i) On medium term deposit – 2.25% p.a.

(ii) On long term deposit – 2.50% p.a.

Redemption Options: 

Customers can choose to redeem the gold deposit either in Gold or Cash but this choice must be made at the time of opening the deposit.

  • For STBD, you have an option to redeem your principal either in the form of Gold or in equivalent INR as on the date of maturity.
  • In case of MLTGD, you can again redeem in INR equivalent or in Gold form. However, you will be subject to an administrative fee of 0.2% in case you decide to redeem in metal form.

Premature Withdrawal Options: 

  • Short term deposits can be withdrawn in whole or part subject to a minimum lock-in period of 1 year. No premature period of payment will be allowed during the said period.
  • MLTGDs can be withdrawn at any time after 3 years while LTGDs can be withdrawn after 5 years.
  • Any premature redemption shall be in Indian rupee equivalent or Gold at the discretion of the bank. In all cases of premature withdrawal, interest will be payable on the actual number of days the deposit has run on a simple interest basis subject to recovery/ adjustment of interest already paid if any.

Tax Benefit

An important benefit of this scheme is that there is no taxation. The interest, as well as the maturity amount, are completely tax-free.

Points To Remember: 

  • Customers have to note that the deposited jewelry won't stay in the same form in which it was deposited. It will be melted and stored in the form of 99.9% pure gold bars. If you have any studs or stones embedded in your jewellery, the same will be removed and handed over to you before the value has arrived.
  • The final gold deposit amount is based on the purity of the Gold as assayed by CPTC. So, impurities if any, will reduce the gold deposit amount.
  • Depositors can choose to redeem the gold deposit either in Gold or Cash but this choice must be made at the time of opening the deposit.
  • If you choose to redeem the account in gold, the mode of payment will be coins and any fractional parts (i.e. less than 1 gm) will be converted to cash as per prevailing rates at the time of redemption.

What are the benefits of the Gold Deposit Scheme?

What makes the Gold Deposit Scheme attractive to customers? Why should you choose to deposit your unused gold with this account? Let us have a look

  • Earn money on your idle gold: Indians usually deposit their unused gold in bank lockers, where they spend their lifetime without being of use to anyone. But, with this account, you can make your unused gold work for you. They could fetch you an annual interest while appreciating in value. You get higher returns when you redeem them at maturity.
  • No cost of storage or security: Since you are depositing the gold with the bank, there is no need for you to spend towards bank locker charges or other security measures to safeguard your gold. Upon maturity, you can receive the same amount of gold.
  • Flexibility in depositing: You can deposit as less as 30gms of gold to start this account. You can also deposit the gold in any form, viz. jewellery, gold coins or gold bars.
  • Tenures to suit your needs: You can choose between short term, medium term or long term tenures to suit your needs.
  • Attractive interest rates: Your idle gold earns you an interest of up to 2.5% p.a
  • Convenient redemption options: You are allowed to redeem the gold either in cash or gold to suit your needs.
  • Tax benefits: The interest amount and the redemption amount are tax exempted.

IOB Gold Monetization Scheme FAQs:

1. Can I open an account jointly with my wife?

Yes, the account can be opened jointly by two or more eligible depositors. In such cases, the interest shall be credited to the joint deposit account opened in the name of such depositors.

2.Is there a lock in period on this deposit?

Yes, there is a minimum lock in period of 1 year on this deposit.

3. How is the interest calculated on this deposit?

Interest shall be paid annually on the 31st of March every year. A depositor will have an option to receive payment of simple interest annually or cumulative interest at the time of maturity, in which case it will be compounded annually.

4.What is the amount I will receive on maturity?

The depositor shall receive the actual market value of the gold deposit along with the accrued interest.

5. Will I get the same jewellery I deposited at the time of maturity?

No, you will not receive the same jewellery you deposited at the time of opening the account. It will be melted and stored in the form of 99.9% pure gold bars. If you have any studs or stones embedded in your jewellery, the same will be removed and handed over to you before the value is arrived.

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