The Central government is expected to unveil a revamped Gold Monetisation Scheme (GMS) within the next two weeks, according to sources familiar with the matter. The proposed framework is aimed at mobilising more than 1,000 tonnes of idle household gold by widening participation and addressing some of the structural challenges that limited the success of the earlier scheme.

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Jewellers Likely to Be Included as Collection Partners

A major change under the proposed framework is the inclusion of jewellers as collection partners. Unlike the previous structure, where banks were the only institutions permitted to accept gold deposits, jewellers across the country may be authorised to aggregate household gold before it enters the formal monetisation process.

The All India Jewellers & Goldsmith Federation (AIJGF) said the revised framework would allow jewellers to play a wider role in collecting household gold, making the scheme more accessible to consumers.

The proposed changes come as gold price movements continue to influence buying patterns in India, one of the world’s largest consumers of the precious metal.

Objective Is to Reduce Import Dependence

The Gold Monetisation Scheme was introduced in 2015 to reduce reliance on imported gold and help contain the country’s current account deficit. Under this arrangement, people would be able to deposit gold in banks and get annual interest, which was anywhere from 2.25% to 2.5%, based on the tenure. Those with short-term deposits also have the option to take gold or the rupee value at the end of their term.

Even with all these incentives, participation was still low. By March 2025, only 38 tonnes of gold had been mobilised under the scheme against India’s estimated household holdings of nearly 25,000 tonnes. Medium-term and long-term deposit options were also discontinued.

According to AIJGF, monetising even 5% of India’s household gold holdings could unlock liquidity of nearly $90 billion while reducing dependence on imported bullion. The industry body has urged the government to introduce structural reforms that preserve domestic demand while bringing idle gold into the formal economy.

Structural Challenges Limited Earlier Scheme

Bhavik Patel of Tradebulls Securities said the earlier scheme became financially expensive because the government had to bear both interest payments and the appreciation in gold price, resulting in mounting costs over time.

AIJGF also said many households were reluctant to deposit inherited or sentimental jewellery due to its emotional, religious and cultural significance. The federation added that concerns related to documentation and tax scrutiny, along with limited commercial incentives for banks, also affected participation.

Revised Framework Expected to Improve Participation

The proposed overhaul seeks to overcome these challenges by expanding the collection network beyond banks and making the scheme easier to access. The development also follows Prime Minister Narendra Modi’s recent appeal asking citizens to defer fresh gold purchases for one year.

If implemented, the revised Gold Monetisation Scheme could improve domestic availability of recycled gold, strengthen the formal gold ecosystem and help reduce the country’s dependence on imports while making better use of existing household holdings linked to gold price trends.