India Wants to Put Its Household Gold to Work. Could a Revamped Gold Scheme Finally Succeed?

India’s Gold Monetisation Scheme could be set for another rethink as the country looks for ways to put more of its enormous household gold holdings to productive use. India has spent years trying to solve an unusual economic problem: the country owns an extraordinary amount of gold, but much of it sits outside the formal financial system.

Gold jewellery, coins and bars held by Indian households represent generations of savings. Yet India also remains heavily dependent on imported gold to meet new demand.

Now, policymakers and the jewellery industry are once again looking at ways to bring some of that existing gold back into circulation.

Recent reports suggest that the Indian government is considering changes to the Gold Monetisation Scheme that could give jewellers a much larger role in collecting gold from customers. Industry representatives have also discussed incentives that could make it commercially worthwhile for jewellers to participate.

It is still a proposal rather than a newly announced government programme. But the idea raises a much bigger question for the world’s gold market:

Can India persuade households to put even a small part of their enormous gold holdings back to work?

India Already Has an Enormous Stock of Gold

There is no official census of the gold stored in Indian homes, so estimates inevitably vary.

The World Gold Council has previously estimated that Indian households may hold as much as 25,000 tonnes of gold. More recent industry estimates reported in the Indian media put the figure even higher.

Whatever the exact number, the scale is exceptional.

Gold in India is not simply another investment. It is accumulated through weddings, festivals, inheritance and household savings. Jewellery can remain within a family for decades and may never return to the market.

At the same time, India produces relatively little gold domestically and has historically depended heavily on imported bullion. The World Gold Council notes that imports have traditionally provided much of the metal required to satisfy Indian demand.

That creates an obvious economic opportunity.

If some of the gold already sitting in Indian homes could be collected, refined, and reused, the country would have another source of supply without having to import an equivalent quantity of newly purchased bullion.

How the Gold Monetisation Scheme Works in India

India’s Gold Monetisation Scheme was introduced in 2015.

Its stated objective was straightforward: mobilise gold held by households and institutions, put that gold to productive use and, over time, reduce India’s reliance on gold imports.

Under the scheme, eligible holders can deposit physical gold. The metal is tested for purity, converted into standardised gold and credited to a gold deposit account.

The system was designed so that mobilised gold could eventually find its way back into the domestic gold economy rather than simply remaining stored away.

The Reserve Bank of India’s current rules allow eligible depositors to place raw gold, including bars, coins and jewellery, excluding stones and other metals. The current minimum deposit is 10 grams, with no prescribed maximum.

There is one important change to understand, however.

In March 2025, the Government of India discontinued new Medium and Long Term Government Deposits under the scheme following a review of its performance and changing market conditions. Existing deposits were allowed to continue, while the Short-Term Bank Deposit, typically running from one to three years, remained available through participating banks.

So the Gold Monetisation Scheme did not disappear. But its structure became considerably narrower.

Why Has Gold Monetisation Been So Difficult?

On paper, the idea makes sense.

In practice, getting Indian households to hand over their gold is much more complicated.

A gold bar bought purely as an investment may be relatively easy for its owner to sell, pledge or deposit.

Family jewellery is different.

A necklace inherited from a parent or grandparent may carry an emotional value that has little relationship to its market price. Wedding jewellery can have similar significance.

There is another practical issue.

Under the monetisation process, jewellery may need to be melted to establish its actual gold content. The RBI explains that if an owner proceeds to the fire-assay stage, the original jewellery cannot simply be returned in its previous form. If the depositor subsequently changes their mind, the gold can only be returned in its post-melted form.

That is a meaningful psychological barrier.

The owner is not merely moving an investment from one account to another. In many cases, they are permanently giving up the original piece of jewellery.

Convenience and trust matter too.

Gold monetisation requires purity testing, documentation, a relationship with a participating bank and a functioning network through which physical gold can be collected and refined.

The Bureau of Indian Standards says recognised Assaying and Hallmarking Centres can qualify as Collection and Purity Testing Centres under the scheme. Its published information also illustrates how limited the collection network has historically been.

This is where jewellers could become particularly important.

Why Jewellers Could Change the Equation

The jewellery store is already where much of India’s physical gold economy operates.

Consumers buy gold there. They exchange old jewellery there. They have existing relationships with jewellers and often return to the same businesses over many years.

Instead of asking a household to discover a government-backed deposit programme and navigate the process independently, the jeweller could become the point through which the customer enters the system.

This concept is not entirely new.

The RBI’s existing Gold Monetisation Scheme directions already recognise qualifying jewellers and refiners that meet the required standards as GMS Mobilisation, Collection & Testing Agents, or GMCTAs.

What appears to be under discussion now is a much broader effort to make jewellers active participants in mobilising household gold.

Recent Indian media reports have cited industry representatives suggesting that participating jewellers could receive an incentive of roughly 0.75% to 1% of the gold they mobilise.

That figure should be treated as a reported proposal, not a confirmed government rate. No final policy announcing such an incentive had been published by the Government of India or RBI at the time of writing.

But the economic reasoning is easy to see.

Give jewellers a reason to promote gold monetisation, and thousands of established relationships between jewellery businesses and gold-owning households potentially become distribution channels for the programme.

High Gold Prices May Also Be Changing Consumer Behaviour

There is another factor working in favour of greater mobilisation: the enormous rise in the value of gold.

As gold becomes more valuable, an old necklace or collection of unused jewellery represents a much larger pool of household wealth than it did several years ago.

That does not necessarily mean owners will sell it.

In fact, recent evidence suggests many Indian consumers prefer to exchange old gold for new jewellery rather than sell it outright.

The World Gold Council reported that Indian recycling increased during the first quarter of 2026, but also noted that old-gold exchange remained an important part of jewellery purchasing behaviour. The distinction matters: exchanging an old piece for a new one keeps the gold within the jewellery ecosystem and is not necessarily the same as supplying additional recycled gold to the broader market.

Still, it demonstrates something important.

Indian households are willing to transact using gold they already own.

The challenge for a redesigned monetisation programme is to convince some of those households that depositing or monetising gold is more attractive than simply keeping it at home.

Could This Reduce India’s Gold Imports?

Potentially, yes.

That has been one of the government’s objectives from the beginning.

Imagine, for example, that Indian consumers and institutions require 800 tonnes of gold in a particular year.

If almost all of that requirement has to be satisfied through imports and existing commercial inventories, India’s dependence on the international market remains high.

But if an additional 100 or 200 tonnes can be sourced from gold already held domestically, the equation changes.

Domestic gold can be:

collected → assayed → refined → supplied back into India’s gold industry

rather than every incremental ounce having to originate abroad.

The RBI already permits gold mobilised under Short-Term Bank Deposits to be sold or lent to jewellers and other eligible participants.

That is what makes monetisation economically significant. The objective is not simply to identify how much gold Indian households own. It is to turn part of that stock into usable domestic supply.

Would This Push Global Gold Prices Lower?

A successful programme could reduce one source of global physical demand, but the effect should not be overstated.

India is an important participant in the international gold market. If the country were able to satisfy substantially more of its domestic requirements through locally mobilised gold, its need for imported bullion could decline.

That would, all else being equal, remove some demand from the international market.

But this would not be equivalent to India suddenly releasing tens of thousands of tonnes of gold for sale.

Most household gold is unlikely to enter a monetisation programme. And gold collected within India could simply be recycled into India’s own jewellery and investment market.

The global effect would therefore come primarily through reduced incremental import demand, rather than a huge new wave of Indian gold being dumped onto international markets.

It is also worth keeping the numbers in perspective.

The World Gold Council estimates that total worldwide gold demand exceeded 5,000 tonnes in 2025, including over-the-counter demand. Global recycled supply was around 1,404 tonnes for the year.

Even a successful Indian mobilisation programme would therefore operate within a much larger global market influenced by investment flows, central-bank purchases, jewellery demand, mine production, interest rates, currencies and geopolitical conditions.

Can the Gold Monetisation Scheme Finally Succeed?

India does not have a shortage of gold.

It has a mobilisation problem.

That distinction has been clear since the Gold Monetisation Scheme was introduced more than a decade ago.

The country already possesses an enormous above-ground stock of the metal. What policymakers have struggled to create is a system compelling enough for ordinary owners to move meaningful quantities of that gold into the formal economy.

Bringing jewellers closer to the centre of the process could help solve the trust and distribution problem.

Higher gold prices could provide another incentive by making dormant jewellery increasingly valuable.

But the fundamental hurdle remains cultural as much as financial.

For millions of Indian households, gold is not idle simply because it is sitting in a cupboard or safe. It may represent savings, security, inheritance and family history all at once.

A redesigned Gold Monetisation Scheme will succeed only if it gives those owners a reason strong enough to part with the physical gold they have spent generations accumulating.

If India finds that formula, the consequences could extend well beyond the jewellery counter.

It could reshape the way one of the world’s largest gold-consuming economies sources its metal — and gradually reduce the amount of new bullion India needs to buy from the rest of the world.

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Sources and further reading

• Department of Economic Affairs — Gold Monetisation Scheme, 2015
• Reserve Bank of India — Gold Monetisation Scheme FAQs
• Reserve Bank of India — Gold Monetisation Scheme Directions
• Press Information Bureau — Discontinuation of Medium and Long Term Government Deposits
• Bureau of Indian Standards — Gold Monetisation Scheme
• World Gold Council — India’s Gold Investment Market and Financialisation
• World Gold Council — Gold Demand Trends: Full Year 2025
• World Gold Council — India Gold Demand Trends, Q1 2026

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