The Reserve Bank of India has made a few amendments to its Master Direction on Gold Monetization Scheme. The modifications have been made in consultation with Central Government to make the Scheme more customer-friendly.

The depositors will be able to withdraw medium term and long term government deposits pre-maturely after the minimum lock-in period of three years in the case of medium term deposits and after five years in the case of long term deposits. However, there will be penalty in the form of lower rate of interest for premature withdrawals depending upon the actual period for which the deposit has run.

In the case of large tenders of gold, gold can be deposited directly with refiners wherever they have the assaying capacity. This will reduce the time lag between the time the raw gold is deposited and it starts bearing interest.

It is also clarified that Government will pay the participating banks a total commission of 2.5% (1.5% handling charges and 1% commission) in the first year.

The Scheme will be reviewed regularly based on feedback so as to address any implementation issue and to make it more customer friendly.

Ajit Prasad

 Assistant Adviser 

Gold monetization scheme amendments allow premature withdrawals after lock in with interest penalties and direct refiner deposits. Amendments to the Gold Monetization Scheme permit premature withdrawal of medium and long term government gold deposits after the respective lock in periods subject to a lower interest rate penalty based on actual deposit duration; allow direct deposit with refiners where assaying capacity exists to reduce time to interest accrual; provide a first year commission to participating banks for handling and distribution; and require regular review of the Scheme to resolve implementation issues and enhance customer friendliness.