Step-by-Step Process to Invest in a Gold Deposit Scheme

Introduction

Gold holds a special place in Indian households. For generations, it has been considered a symbol of wealth, security, and culture. However, most gold in homes sits idle — offering no financial return. The Gold Deposit Scheme (GDS) provides a way to convert that idle asset into an earning investment.

Introduced by the Government of India, GDS allows individuals and institutions to deposit physical gold and earn interest on it. It’s a smart solution for those who want to keep their gold safe while benefiting financially.

This article explains how you can invest in a gold deposit scheme — clearly, calmly, and step-by-step — so you can understand and act on it.

Understanding Gold Deposit Schemes

What is a Gold Deposit Scheme

A Gold Deposit Scheme is a financial plan that lets you deposit your unused physical gold with banks and earn interest on it. This gold is later used by the government or financial institutions to reduce imports, meet domestic demand, or create gold-based products.

Types of Gold Deposit Schemes in India

1. Gold Monetisation Scheme (GMS): Launched by the government in 2015, this scheme encourages individuals to deposit their gold and earn interest.
2. Revamped Gold Deposit Scheme (R-GDS): A newer version of earlier schemes, offering improved features and flexibility.

Key Features and Benefits

Earn Interest on Idle Gold: Instead of storing gold in lockers, it earns you money.

Safety and Transparency: The gold is securely stored and professionally managed.

Tax Benefits: Interest earned is exempt from capital gains tax, wealth tax, and income tax (as per existing laws).

Support National Economy: Helps reduce India’s dependence on gold imports.

Eligibility Criteria for Investing in GDS

Who Can Invest

• Resident individuals (single or joint account)
• Hindu Undivided Families (HUFs)
• Trusts and charitable institutions
• Mutual funds and companies (in some cases)

Minimum and Maximum Deposit

• Minimum: 10 grams of gold (in the form of jewellery, coins, or bars)
• Maximum: No upper limit, but subject to KYC and bank regulations

Forms of Acceptable Gold

• Gold jewellery (excluding stones or other metals)
• Bars and coins (of standard purity)

Step-by-Step Process to Invest in a Gold Deposit Scheme

Step 1: Assess Your Gold Holdings

Start by reviewing how much physical gold you can spare. It should be idle — not jewellery you regularly use. Ensure it is in a depositable form: bars, coins, or plain jewellery.

Step 2: Choose the Right Bank or Institution

Select a bank that offers the GDS, preferably one with a Collection and Purity Testing Centre (CPTC). Check:

• Interest rates
• Lock-in period
• Credibility and reputation
• Branch or digital process availability

Leading banks like SBI, ICICI, and HDFC Bank offer these schemes.

Step 3: Visit a Collection and Purity Testing Centre

Once the bank is selected, visit the designated CPTC:

• Your gold will be melted to test purity.
• You will receive a receipt with the exact weight and purity.
• If you’re not satisfied, you can cancel and take your gold back immediately.

Step 4: Open a Gold Deposit Account

With the purity receipt, you can now open a gold deposit account. The bank will provide a form to fill in your details and deposit choice.

Documents Required:

• PAN card
• Aadhaar or Passport (as identity and address proof)
• Passport-sized photographs

This account can be either a Savings Gold Deposit Account (for short-term) or a Term Gold Deposit Account (for medium and long-term).

Step 5: Finalise the Deposit Terms

Choose your deposit duration:

• Short-term: 1 to 3 years
• Medium-term: 5 to 7 years
• Long-term: 12 to 15 years

The interest rate will depend on the term and issuing bank. For example, short-term rates could be around 0.5%–1% p.a., while long-term options may go up to 2.5% p.a.

Step 6: Receive the Gold Deposit Certificate

Once your gold is accepted and processed:

• You receive a Gold Deposit Certificate indicating weight, tenure, and interest rate.
• This acts as proof of investment — keep it safe.
• Interest is paid either periodically or at maturity, depending on your selection.

Benefits and Risks of Investing in a Gold Deposit Scheme

Key Benefits

• Regular Earnings: Earn interest instead of letting gold sit idle.
• No Locker Fees: Banks hold your gold securely, saving you locker costs.
• Tax Benefits: Exemption on interest and maturity value, subject to existing laws.
• Redemption Flexibility: In some cases, you can choose redemption in cash or equivalent gold value.

Potential Risks

• Gold Price Volatility: Since redemption might be in rupee equivalent, market rates matter.
• Premature Withdrawal: Usually allowed only after a lock-in period with penalties.
• Institutional Risk: Ensure you invest only through government-authorised banks or recognised platforms.

While depositing gold under the Gold Deposit Scheme helps earn steady interest over time, some may prefer retaining ownership while meeting immediate financial needs. In such cases, a gold loan can serve as a practical alternative—offering access to funds without parting with your gold for the long term. Financial marketplaces like Bajaj Markets make this even easier by helping you compare and apply for gold loans from trusted lenders, all in one place.

The platform offers:

• Paperless application
• Real-time approval tracking
• Access to multiple financial partners

Investing in a gold deposit scheme is a smart, safe way to let your idle gold earn for you. It not only removes the cost and worry of physical storage but also supports the broader economy by reducing reliance on gold imports.

By following the simple steps outlined above — from choosing a bank to receiving your Gold Deposit Certificate — you can confidently begin your journey in gold monetization.