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| February 15, 2024

Know About All Govt Schemes to Invest in Gold

In recent years, investing in gold has emerged as a popular avenue for diversifying portfolios and safeguarding wealth. Gold not only represents prosperity and stability but also carries significant cultural importance in India. Recognizing its worth and the increasing demand for gold loans in India, the Indian government has implemented several schemes to enable individuals to leverage the value of their gold assets. These initiatives aim to provide accessible and cost-effective credit solutions, addressing the varied financial requirements of the populace.

What are Government Investment Schemes?

The Indian government, along with several public sector financial institutions, has launched investment schemes aimed at providing opportunities for Indian citizens. These initiatives are designed to promote responsible financial practices among the populace. Historically, Indians tended to hoard their wealth, resulting in sluggish economic growth. By participating in government investment schemes offering attractive returns and benefits like tax exemptions, individuals can effectively grow their wealth and contribute to the country's economic development.

Top Government Schemes to Invest in India

Below mentioned are some of the most popular government gold schemes:

Sovereign Gold Bond Scheme (SGB)

The government-backed scheme allows investors to gain exposure to gold without physically possessing the precious metal. Through this initiative, investors can purchase bonds denominated in grams of gold, issued by the Reserve Bank of India (RBI) on behalf of the Government of India. These bonds offer an 8-year maturity period, with the option to redeem them after 5 years from the date of issuance.

The interest rate on these bonds is fixed at 2.5% per annum, with semi-annual interest payments. Understanding gold loan eligibility criteria is crucial before applying. This innovative approach enables investors to participate in the gold market without the challenges associated with storing and safeguarding physical gold.

Gold Monetisation Scheme (GMS)

The scheme allows individuals to deposit their gold holdings, whether in the form of bars, coins, or jewellery, with banks authorised by the Reserve Bank of India (RBI). The deposited gold is melted and refined to meet the required purity standards. In exchange, the banks issue a certificate of deposit (CD) to the depositor, representing the amount of gold deposited.

This CD serves as a valuable asset, which can be used as collateral for obtaining loans or redeemed for cash at any time, providing depositors with the flexibility to get the value of their gold holdings while earning interest on their deposits. Browsing for a gold loan near me? With Muthoot Finance, you can get a Gold Loan at the best interest rate from the comfort of your home.

Gold Metal Loan Scheme (GML)

The Gold Metal Loan (GML) allows jewellery manufacturers to borrow gold metal instead of rupees. Under this arrangement, the manufacturer borrows a specific quantity of gold from a lender, typically a bank or a financial institution. Instead of repaying the loan in cash, the manufacturer settles the GML using the proceeds obtained from the sale of the finished jewellery products.

This loan facility can be availed for a period of 180 days for domestic jewellery manufacturers and up to 270 days for exporters. This enables manufacturers to access the necessary raw materials (gold metal) without incurring significant upfront costs, facilitating the production and sale of jewellery while repaying the loan through the sales proceeds.

Revamped Gold Deposit Scheme (R-GDS)

In this updated version of the previous Gold Deposit Scheme, individuals have the opportunity to deposit their unused gold assets with banks and earn interest on them. The deposited gold is subsequently melted and refined to meet the necessary purity standards. The minimum deposit requirement for this scheme is 30 grams of unrefined gold. Deposits can be made for periods ranging from 1 year to 15 years, with the interest rates offered varying among different banks.

Gold Coin and Bullion Scheme

Under this government-backed initiative for gold loans in India, individuals are permitted to purchase gold coins and bars from banks authorised by the RBI. These coins and bars come in a variety of denominations, spanning from 0.5 to 100 grams.

Pradhan Mantri Gold Loan Yojana

The Pradhan Mantri Gold Loan Yojana, alternatively referred to as the Pradhan Mantri Gold Loan Scheme, seeks to facilitate accessible credit for small-scale farmers, traders, and artisans by leveraging their gold assets. Eligible participants can secure gold loans at competitive interest rates from banks and financial entities catering to a wide array of financial needs including agricultural expenditures, business growth, and unforeseen personal circumstances.

Pradhan Mantri Swarna Yojana

Likewise, the Pradhan Mantri Swarna Yojana (PMSY) is dedicated to empowering women through financial assistance via gold loans. By leveraging their gold assets, this initiative encourages women to pursue their financial objectives and dreams, fostering economic empowerment and inclusivity to positively impact their lives.

Gold loan schemes in India initiated by the government play a crucial role in offering individuals convenient credit access and utilising the value of gold assets. These schemes contribute significantly to the nation's economic development by converting idle gold holdings into productive resources. At Muthoot Finance, we have financial experts to cater to your gold loan needs in India as per your financial goals, be it debt- or equity-oriented. Just search "gold loan near me" to visit your nearest Muthoot Finance branch and learn more.

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