India's Gold Monetisation Scheme allows residents to deposit jewellery, coins, or bars (after removing stones and impurities) with authorised collection centres. According to reports, the gold is tested for purity, converted into standard gold, and credited into a deposit account in grams. The scheme offers 2.25%-2.5% per annum interest in rupee terms with a minimum deposit of 10 grams and no upper limit. At maturity, depositors can withdraw either gold or rupee value, though the scheme remains one of the least-used financial instruments in the country despite rising gold prices.
According to Suvankar Sen, CEO and MD of Senco Gold Ltd, the core challenge lies in perception rather than practicality. As reported, households do not treat gold as a financial instrument but view it as security in emergencies, family inheritance, and a symbol of continuity across generations. Sen explains that gold is "an emotional and cultural asset rather than a purely financial one." The scheme faces practical resistance as deposited gold is often melted and converted into standard bars for financial processing, creating discomfort for households who associate their jewellery with weddings, gifts, or inherited memories.
Experts highlight that the scheme's 2.25%-2.5% annual interest is structurally modest compared to what people expect from gold over long periods. According to reports, many households assume gold prices will continue rising, making locking it into a fixed-interest structure feel unnecessary. CFP Shweta Shastri notes that Indian households already have an alternative system through gold loans, where families prefer to pledge jewellery, take quick loans, repay and retrieve the same gold later, preserving both ownership and flexibility.
With gold prices rising again, the total value of household gold in India continues to increase, but most remains outside the financial system. As reported, the Gold Monetisation Scheme was designed to bring idle gold into circulation and reduce import dependence. However, behavioural patterns show that instead of formal monetisation, people are more comfortable exchanging old jewellery for new designs to preserve emotional continuity. This preference for liquidity and flexibility over permanent deposit remains a significant barrier to scheme adoption, even among financially aware households.
