India’s jewellery trade body is pushing regulators to overhaul a long-underperforming scheme that was designed to bring the country’s vast private gold holdings into the formal financial system, but which has largely failed to do so since its launch a decade ago.
The All India Gem and Jewellery Domestic Council (GJC) has submitted a revised framework to the Reserve Bank of India (RBI) and the Ministry of Finance (MoF) for a comprehensive redesign of the Gold Monetisation Scheme (GMS). The proposal was developed through consultations across India’s banking, refining, and jewellery sectors and centres on digitising the entire process of gold deposit and conversion.
The original GMS has struggled to generate meaningful participation. By March 2025, the scheme had mobilised only around 38 tonnes of gold, a fraction of what policymakers had hoped, with households reluctant to surrender jewellery for melting and deterred by concerns over income tax scrutiny on inherited gold without formal records.
The revised model seeks to address those barriers directly. Its central feature is a shift away from physical deposit toward a dematerialised gold balance system, where gold including bullion, coins, and jewellery is converted into digital holdings within the banking system. Investors would earn interest on these holdings without needing to liquidate their gold or have it melted, a change that industry leaders believe will significantly widen participation.
GJC Chairman Rajesh Rokde said the proposal integrates jewellers into a regulated digital ecosystem and could reduce India’s dependence on gold imports by mobilising supply that is already in the country. Vice Chairman Avinash Gupta described the framework as practical, scalable, and built to meet regulatory expectations, with accountability enforced through know-your-customer (KYC) compliance, digital transaction records, and audit trails.
India holds an estimated 20,000 tonnes or more of privately held gold, making it one of the largest untapped stores of the metal in the world. Converting even a portion of that into productive financial assets would ease pressure on the country’s current account deficit (CAD), which is partly driven by sustained demand for gold imports.
The GJC said it will continue engaging with the RBI and the Ministry of Finance on implementation.
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