If you are among those who have inherited gold that is idling in bank lockers, there is good news. You can now monetise this gold.

The Finance Minister has launched a ‘gold monetisation scheme’ where you can deposit your old gold and earn interest on it.

Also, for all gold lovers, there is an alternate investment option now — sovereign gold bonds.

Monetisation scheme

The gold monetisation scheme will replace the gold deposit schemes run by banks currently. SBI offers a scheme wherein it takes old gold jewellery from you and issues a certificate. At the end of the deposit period (three to five years), the bank repays you by giving gold of 0.9999 purity of the same weight as the gold that you had deposited.

There is also an option to redeem the deposit as cash at the then prevailing market price of gold.

However, the scheme has not been a hit due to several reasons. A minimum of 500 gram of gold needs to be deposited and there is a lock-in period of one year before which redemption will not be allowed.

Also, the interest offered is nominal. For a three-year deposit, the interest is 0.75 per cent per annum on the weight of the gold (if it is a four- or five-year deposit, the interest rate is 1 per cent per annum) and paid in cash.

The Finance Minister has said the new scheme will accept gold but there is no clarity on whether gold jewellery will be accepted.

Also, how much interest will be offered and what would be the other terms and conditions are not known yet.

If interest is calculated on the weight of gold, as it is now in the gold deposit schemes, it will benefit you in a scenario of rising gold prices.

Sovereign gold bond

The government is also likely to introduce sovereign gold bonds soon. People who want to buy gold can alternatively look at this option.

These bonds will carry a fixed rate of interest which will be paid to you in cash at the time of redemption. You may use the cash to buy gold.

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