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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.
About Indian Overseas Bank Gold Deposit Schemes
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.
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)
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:
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.
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.
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.
Premature Withdrawal Options:
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:
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
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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