How NDA govt plans to bring Gold out of Indian households out into the market!

Tue Aug 04 2026

Jewellery stores trusted by millions of Indian families could become the new entry point for a government push to move unused household gold into the formal bullion system.

The Centre is considering including jewellers in a revamped Gold Monetisation Scheme for the first time. They could collect and aggregate gold from households before transferring it to authorised refiners and banks.

The proposal seeks to tap a portion of the nearly 30,000 tonnes of gold estimated to be lying idle in Indian homes. The larger objective is to create a domestic supply of bullion and reduce India’s reliance on imports.

The plan has gained momentum following discussions involving senior ministers, banks, the Reserve Bank of India, and representatives of the gold trade.

According to an ET report, the revised scheme is to be announced in August, before the festive season begins. No formal announcement has been made yet.

Why jewellers may be brought into Gold Monetisation Scheme

The government launched the Gold Monetisation Scheme in 2015 to encourage households and institutions to deposit physical gold with banks instead of leaving it unused in homes and lockers.

The scheme, however, has struggled to attract depositors. Only around 39 tonnes of gold have been mobilised in 11 years.

Jewellers could help overcome the trust and access barriers that have limited participation.

Unlike banks or designated testing centres, local jewellers already maintain regular relationships with customers. Jewellers already have the customer base, local reach and expertise needed to evaluate and handle gold. Under the proposed system, they could act as collection points, receiving gold from households and sending it on to authorised refiners and banks. The process would be required to maintain ‘traceability’ and ‘transparency’.

How household gold could enter the banking system

Under the existing scheme, a person takes gold to an authorised Collection and Purity Testing Centre.

The gold is first examined to establish its purity. With the depositor’s consent, it is then melted and converted into gold of 995 fineness.

The equivalent quantity is credited to a Gold Deposit Account maintained with a bank.

Interest on the deposit is paid in rupees. The principal can be redeemed in gold or through an equivalent rupee payment under the applicable deposit terms.

A minimum of 10 grams of raw gold can currently be deposited. There is no upper limit.

The medium and long-term government deposit components were discontinued from March 26, 2025. The remaining Short-Term Bank Deposit option has a tenure ranging from one to three years.

Jewellers could receive fee for collecting household gold

Jewellers participating in the proposed system are expected to receive a service or handling fee.

The payment could cover the collection of gold, purity assessment, processing of deposits and facilitation of transactions between customers, refiners and banks.

The arrangement could also give the jewellery industry greater access to gold mobilised within India.

Domestic gold collected through the scheme may provide jewellers with an alternative to imported bullion. It could also help them manage inventory and reduce financing costs.

Why Centre wants to reduce imported gold dependence

India’s demand for gold has traditionally required substantial bullion imports.

High international prices and elevated import duties have added to the cost of jewellery and weighed on demand. Gold imports also place pressure on the country’s import bill.

The proposed revamp seeks to bring gold already held within India back into productive use instead of meeting fresh demand entirely through overseas purchases.

The success of the plan, however, will depend on whether households are willing to surrender ornaments and other physical gold for melting and conversion into bank deposits.

Source: https://www.thestatesman.com/