Gold Monetisation scheme or GMS launched by the government of India in the year 2015 to mobilize gold deposits held by institutional investors and households has been modified by the RBI to render it more attractive. With the amendment in place, new investors in the scheme will be able to open gold deposit account in a hassle-free manner.

In respect of the short term gold deposits, the apex bank said that these should be treated as on-balance sheet liability for the bank. The notification by the RBI said,"These deposits will be made with the designated banks for a short period of 1-3 years (with a facility of roll over). Deposits can also be allowed for broken periods (e.g. 1 year 3 months; 2 years 4 months 5 days; etc.)". It added that for deposits having maturities with broken periods, interest rate payable should be arrived at by summing up interest for the completed year and interest for the remaining number of days.

Further the medium term government deposit or MTGD and long term government deposit or LTGD can be made for 5-7 years and 12-15 years, respectively or as may be decided upon by the government from time to time. The scheme fetches return to the tune of 2.25-2.50 per cent to banks' customers on idle gold kept with them for fixed tenure.

For MTGD deposits, RBI said, the redemption of the principal at maturity can be executed as per the discretion of the deposit holder i.e. either in rupee equivalent of the value of gold deposited at the time of redemption, or in gold. But in case the redemption is being executed before the maturity, it shall only be Indian rupees. Also it said, "where the redemption of the deposit is in gold, an administrative charge at a rate of 0.2 per cent of the notional redemption amount in terms of INR shall be collected from the depositor". And interest for MTGD will be based on the gold value at the time of making the deposit in rupee terms and will be provided only in cash.

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