Gold Monetisation Scheme: How India Plans to Unlock Its $5 Trillion Gold Hoard

India has an unusual asset problem.

A large share of the country's household wealth sits in lockers, cupboards, temple vaults and jewellery boxes. It earns no interest. It funds no business. It does nothing to reduce the country's import bill.

It is gold.

The government wants to put some of it to work. And the answer it is now considering is not another bank product. It is the jeweller down the street.

Why India wants its gold back in the system

India still imports most of the gold its jewellery industry consumes. The FY26 numbers show why that has become expensive.

Read those rows together, and the real story appears. India imported less gold in FY26, about 4.8% less by weight, and still paid 24% more for it. The average import price rose roughly 30%.

That is the trap. Import volumes can fall and the bill can still hit a record. In FY26 it did, at $71.98 billion.

Meanwhile, a far larger stock of gold already sits inside the country, doing nothing.

The number that explains the problem

The Gold Monetisation Scheme was launched in September 2015 with exactly this goal: mobilise idle household and temple gold and route it to the jewellery industry.

By November 2024 it had collected 31,164 kg, roughly 31 tonnes, from about 5,693 depositors. By March 2025 the total was around 38 tonnes. Industry estimates put it near 39 tonnes today.

Now set that against the stock it was meant to tap.

The World Gold Council puts household and temple gold at about 25,000 tonnes. Wider counts of all the gold built up over the years reach roughly 34,600 tonnes.

Against the conservative 25,000-tonne figure, 39 tonnes works out to 0.16%.

In eleven years, the scheme reached about one-sixth of one percent of its target pool. India did not lack gold. It lacked takers.

The part most coverage leaves out

The scheme was not simply underperforming. Most of it was shut down.

The government ended the Medium Term and Long Term Government Deposit parts of the scheme from March 26, 2025. It cited the scheme's record and market conditions. Deposits made before that date still run to term. New ones are not accepted.

Only the Short Term Bank Deposit part survives. Even that runs at each bank's choice, based on whether the bank finds it worth doing. The government's own notice says so.

That context matters. Those two parts brought in most of what the scheme ever collected. Of about 31,164 kg collected up to November 2024, the medium-term part held 9,728 kg and the long-term part 13,926 kg. Short-term deposits accounted for 7,509 kg.

So this is not a tweak to a running scheme. It is closer to a relaunch of one that was largely wound down.

Why jewellers are being brought in

For generations, the neighbourhood jeweller has been where Indians buy, exchange and occasionally sell gold. Banks were never that place.

Under the new plan, jewellers would collect the gold. They would take it in, run a first purity check, then pass it to approved refiners and banks. In return they would earn a service fee for the work.

Some reports have named a commission rate. No figure has been confirmed. What is clear is that a service fee is planned, not how big it will be.

The trade expects the new plan to bring in more than 1,000 tonnes. That is a bold target. It is about 4% of the household stock. It is also roughly 25 times what the scheme managed in eleven years.

The obstacle is not the incentive. It is trust

Gold is not a neutral asset in an Indian home. A necklace carries family history and wedding memories as well as market value.

Asking someone to hand over a necklace to be melted, tested and turned into standard bars is a very different ask. Moving money between accounts is not the same thing. The gold does not come back in the same form.

The rules already cover this. There are set steps for purity testing, deposit receipts and approved testing centres. So the gap was never a lack of rules. It was that families did not trust the process enough to start it.

Adding jewellers changes who holds the counter. It does not answer the questions people actually ask. How is purity judged? How much gold gets credited? What happens during melting? And what paperwork proves the claim later?

What the $5 trillion figure actually means

The headline number deserves a sanity check.

At a spot price of roughly $4,390 an ounce in August 2026, 25,000 tonnes works out to about $3.5 trillion. The wider 34,600-tonne estimate comes to about $4.9 trillion.

So the "$5 trillion" figure sits at the top of a range, not at its centre. It also moves with the gold price rather than with anything India does. A 10% fall in gold takes roughly half a trillion dollars off the number without a single gram leaving a locker.

The more useful number is not the stock. It is the gap between the gold India owns and the gold India actually uses. That gap is currently about 99.8%.

What this means for investors

For anyone holding gold as an investment rather than as jewellery, the scheme is a reminder of a simpler point: physical gold in a locker produces nothing.

That is the whole point of the scheme. Idle metal pays no yield. It costs money to store and guard. And it raises purity and resale questions the day it is sold.

Investors who want gold without that friction already have formal options. Gold ETFs track the metal in dematerialised form. Electronic Gold Receipts allow physical gold to be held and traded in demat units on the exchange. A side-by-side comparison of digital gold, ETFs and sovereign gold bonds sets out how the costs and tax treatment differ.

Traders taking a view on price movements instead use the MCX gold contract, where the exposure is standardised and there is no purity question at all.

The real bet

The case for tapping household gold is stronger now than in 2015. Imports cost $71.98 billion in FY26. The stock at home is huge. The refining and testing set-up is already in place.

What failed was never the maths. It was take-up. The old design put banks at the counter, and Indians have never treated gold as a bank product.

Moving that counter to the jeweller is a sound fix for a real problem. Whether it works rests on something no fee can buy. Families have to believe the gold that leaves their hands is weighed right, valued fairly and still theirs.

That is the actual bet behind the revamped Gold Monetisation Scheme.

Sources: PIB notice ending the MLTGD parts of the scheme, dated March 26, 2025. Ministry of Commerce FY26 trade data for gold import volume and value. World Gold Council estimates for household gold. Gold price of about $4,390 an ounce as of August 13, 2026. The changes described here are reported plans and are not yet notified. Figures as of August 2026 and subject to change.