India Wants Idle Gold Out Of Personal Lockers. Can The New Gold Scheme Do It?

By Katya Naidu

What?

Indians are known to hold enormous amounts of gold in their personal capacities, passed down through generations as heirlooms. According to the India Bullion and Jewellers Association (IBJA), Indian households hold around 35,000 tonnes of gold, valued at Rs 415 trillion (around $4 trillion) as of June 2025. That’s approximately the size of India’s gross domestic product (GDP). 

Yet households don’t earn interest on their vast holdings, the government cannot expand its asset base, and jewellers, who primarily import gold, cannot gain from India’s latent yellow wealth. 

The government had hit upon the idea of monetising this gold in 2015. The scheme, Gold Monetisation Scheme (GMS), 2015 received such a low response that it was discontinued in 2024. The long- and medium-term deposits were discontinued.

It could only bring forth a mere 31 tonnes of gold in nine years – a pittance in a country which imports over 200 tonnes of gold annually. 

Two years since the scheme went kaput, a lot has changed. The rupee has fallen, gold prices shot up unabated in 2’re still in the sky zone in 2026. 

Moreover, our import bill is swelling so much that the country’s Prime Minister Narendra Modi had to appeal to Indians to hold off gold buying right after the West Asia crisis. 

Once again, a plan to revive the gold monetisation scheme is in the works – and is speaking to jewellers as collection points as opposed to only banks. 

“Gold prices surged over 50% since 2024. Households are wealthier only on paper; mobilising this wealth has never been stronger. The structural imbalance signals an urgent need for a formal, market-driven gold ecosystem to channel this wealth productively,” said a report, ‘Unlocking India’s Gold’ by the IBJA. 

How Can It Work This Time? 

The former gold monetisation policy failed due to a lack of awareness, apart from deep distrust in the system. This time, the government aims for success by bringing jewellers,  who carry a certain cachet with gold-buying Indians, on board. 

The CEO of Senco Gold, Survankar Sen, believes that the new system must make it convenient for people to deposit gold. 

“The involvement of jewellers, refiners and banks will be needed for the success of the programme. This action will make sure that idle gold lying in the economy will be best utilised. India has 30,000 tonnes of gold in households and as investments, so even a 10% mobilisation will make our economy stronger in times of global crisis,” he told The Core.  

Jewellers can add an edge to the marketing of the scheme as well as utilise the trust in the system.

 “If you see, it’s not anything new. It’s very common for people in earlier times to buy small holdings of gold and keep it with the jewellers. Once they reach a target like a certain grammage, they convert it into a jewellery piece. That is the kind of trust local jewellers hold, and this can be optimised into a gold monetisation scheme which offers them interest on their gold holdings,” said Bhargava Vaidya, a gold expert and the proprietor of chartered accountancy firm B N Vaidya & Associates. 

Most Indians hold jewellery as an adornment as well as an investment, and few families would not part with it unless they encounter an insurmountable obstacle, which is why most Indians prefer to pawn their gold instead of selling it.

“That manner of thinking is mostly common with the middle class. But the lower middle class tends to circulate gold more. They tend to buy and sell gold as per need, redeem and buy,” said Arole. This class must be targeted more for such schemes.

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