Premature redemption under Gold Monetisation Scheme to be payable in rupees: RBI

The Reserve Bank of India (RBI) has said that premature redemption under the Gold Monetisation Scheme (GMS) will be payable in rupees, while on maturity the depositor may choose to opt for physical gold. In November 2015, the government introduced the Gold Monetisation Scheme with an aim to mobilize gold held by households and institutions and facilitate its use for productive purposes, and in the long run, reduce the country's dependency on imports of the yellow metal.

An RBI circular modifying the scheme said the redemption of principal at maturity shall, at the option of the depositor, be either in Indian Rupee equivalent of the value of deposited gold at the time of redemption, or in gold. However, any premature redemption of Medium and Long Term Government Deposit (MLTGD) would be only in Indian rupee. As per the scheme, the Medium Term Government Deposit (MTGD) can be made for 5-7 years and Long Term Government Deposit (LTGD) for 12-15 years or for such a period as may be decided by the Centre from time to time.

The circular further said banks should seek the option of collecting maturing proceeds in gold or in Indian Rupee equivalent from the depositor at the time of initial deposit. The GMS is implemented through banks.