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India's government will try again to paperize household gold
New Gold Monetisation Scheme in the Works: How Government Aims to Reduce Dependence on Imported Gold
From The Times of India, Mumbai
Friday, July 3, 2026
The government is evaluating a proposal to allow jewellers to participate in a revamped Gold Monetisation Scheme (GMS) as part of efforts to bring into circulation a portion of the nearly 30,000 tonnes of gold estimated to be lying idle with Indian households.
The move is aimed at reducing India's reliance on imported gold and would mark the first time jewellers are being included in the scheme, according to an ET report. Their participation is expected to make the programme more attractive and improve its uptake.
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The proposal has gained traction following multiple meetings held over the past two weeks involving senior government ministers, officials from the Reserve Bank of India, banks and representatives of the gold industry, the report said.
The Reserve Bank of India (RBI) said on Tuesday that the pace of growth in gold imports slowed sharply in May. During the month, PM Narendra Modi had repeatedly urged citizens to curb gold purchases amid economic uncertainty arising from the Gulf conflict.
In its bi-annual Financial Stability Report, the RBI noted that "growth in gold imports ... decelerated substantially in May 2026 compared with the previous month." Gold imports during the month were estimated at around $12 billion.
Despite being in operation for 11 years, the Gold Monetisation Scheme (GMS) has succeeded in mobilising only 39 tonnes of gold from Indian households, according to industry executives.
Introduced in 2015, the scheme was designed to encourage households and institutions to deposit idle gold into the formal financial system. It allowed deposits starting from 10 grams, with no upper limit. However, the programme has since been scaled back.
From March 26, 2025, only the Short-Term Bank Deposit (STBD) option, with tenures ranging from one to three years, has remained in force after the government discontinued the medium- and long-term deposit variants.
Under the scheme, depositors submit their gold to an authorised Collection and Purity Testing Centre (CPTC), where it is tested for purity. After obtaining the depositor's consent, the gold is melted and refined into standard 995-purity gold before being credited to a Gold Deposit Account maintained with a bank.
Depositors receive interest in rupees and, on maturity, have the option of withdrawing either an equivalent quantity of gold or its value in rupees based on the prevailing market price.
Industry executives said the government is keen to roll out the revamped scheme before the festive season, as high gold prices and high import duties continue to dampen jewellery demand and add pressure to the country's import bill.
According to trade sources, the revised Gold Monetisation Scheme is likely to be unveiled in August. The bullion industry has submitted several recommendations to the government aimed at unlocking idle household gold.
"The government is seriously examining the proposal to bring jewellers under the scheme because their involvement can help channel idle household gold into the formal system," said a senior executive from the gold trade who participated in all the meetings.
Under the proposed model, jewellers would function as collection and aggregation centres, routing the gold to authorised refiners and banks while maintaining transparency and traceability throughout the process.
In return, they are expected to receive a service or handling fee for mobilising household gold, conducting purity assessments, processing deposits and facilitating transactions.
In addition, access to monetised domestic gold would provide jewellers with a dependable and relatively lower-cost source of raw material, reduce reliance on imported bullion, improve inventory management and lower financing expenses.
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