India should revamp its Gold Monetisation Scheme to encourage households to deposit idle gold, according to MMTC PAMP. The refiner says a more attractive scheme could unlock significant stocks held by Indian families, reduce the country’s dependence on imported bullion, and make better use of underused refinery capacity at home.
The call comes as policymakers look for ways to shrink the current-account deficit. Every ounce of gold recycled domestically is an ounce that does not have to be bought from overseas.
Why gold recycling matters for India
India is one of the world’s largest gold consumers but mines very little of the metal itself. Nearly all the gold sold in the country is imported, putting pressure on the trade balance.
Boosting domestic recycling would substitute some of those imports. Indian households are estimated to hold more than 20,000 tonnes of gold, much of it in the form of jewellery that is rarely traded or deposited. A more effective monetisation scheme could bring some of that metal back into the formal economy.
Current scheme has not taken off
The Gold Monetisation Scheme was launched by the government in 2015 to allow individuals and institutions to deposit gold with banks and earn interest. The metal is then lent to jewellers or refiners, reducing the need for fresh imports.
Take-up has been limited. Critics say the returns are too low and the process too cumbersome compared with selling gold outright or using it as collateral for loans. MMTC PAMP’s suggestion implies that the scheme needs to offer clearer incentives if it is to attract meaningful volumes.
Refining capacity sits idle
India has several gold refineries, but many operate well below their potential because there is not enough scrap gold to process. More household gold flowing through formal channels would provide the raw material these refineries need, improving their economics and creating a more self-sufficient gold ecosystem.
An efficient recycling chain would also reduce the amount of gold that leaks into unofficial markets, where standards and provenance are harder to verify.
Key takeaways
- India imports most of its gold; greater domestic recycling would reduce reliance on foreign bullion.
- Households hold an estimated 20,000+ tonnes of gold that could be unlocked through an improved monetisation scheme.
- The current Gold Monetisation Scheme has seen low uptake, partly due to unattractive returns and complexity.
- Boosting recycling would also help utilise spare capacity at Indian gold refineries.
Common questions
What is the Gold Monetisation Scheme?
It is a government programme that allows individuals and institutions to deposit gold with banks, earn interest on it, and have the metal lent to jewellers or refiners, reducing the need to import fresh gold.
Why has the scheme not been popular?
The returns offered have been relatively low and the process of depositing and withdrawing gold is seen as less convenient than selling it or using it as loan collateral.
How much gold do Indian households own?
Estimates put the total at more than 20,000 tonnes, much of it in jewellery that sits largely unused.
India’s ability to turn this idle metal into a productive asset depends on whether the scheme can be redesigned to appeal to savers. For now, the country’s live gold price remains heavily influenced by international markets because domestic supply is so small. A stronger recycling pipeline would change that dynamic, giving India more control over its own gold story.