Do you have valuable gold lying idle at home?
Are you paying thousands of rupees every year for bank lockers because of fear of theft?
If this burden is bothering you, there’s now a new way to earn income from your gold.
You can rent or lease your gold and earn interest. Under the Gold Monetization Scheme in public-sector banks, and through private companies offering “gold lease,” you can deposit your gold and earn returns. Private companies generally offer higher interest rates, while public-sector banks offer lower rates but provide more security and trust.
People across income groups buy gold jewellery. Those with surplus income also buy pure 24-carat gold bars and store them, as gold requires less space than cash and its value usually increases. But unlike real estate, which provides monthly rental income, stored gold doesn’t generate income — it just sits idle. To solve this frustration, the gold lease model is gaining popularity.
Who Can You Lease Gold To?
You can lease pure gold bars to jewellery shops, refiners, and fabricators.
Jewellers need gold every day for their business.
Borrowing cash is expensive due to high interest rates, so they prefer taking gold at lower interest.
- With collateral, companies offer around 2% interest.
- Without collateral, they offer 4% interest.
- Some Hyderabad traders even pay around 50 paise per rupee of gold value as interest.
How the Process Works (Like a Loan)
If you have unused gold ornaments, you can lease them.
But note: your jewellery will be melted, purified to 999 purity, and weighed.
After the period ends, you get back pure gold of the same weight, not your original design.
So, don’t lease jewellery if you want it back in its original form.
For gold bars, this is not a problem.
With gold prices rising nearly 50% this year, gold leasing has become extremely popular during the festive season. Earlier, only central banks and bullion banks used these methods, but now even wealthy individuals are adopting it.
A Safer Option: Gold Monetization Scheme (Banks)
If you don’t want to deal with private traders, you can deposit gold in government banks and earn interest through the Gold Monetization Scheme (GMS).
Its purpose is to bring idle gold into circulation and reduce India’s need to import gold, which consumes foreign currency.
Risks You Must Be Aware Of
If your gold is in a locker, you can take it anytime.
But when you lease gold to a trader:
- What if they delay returning it?
- What if the shop closes?
- What if they disappear with the gold?
There have been cases where traders who took gold bars for jewellery production ran away with huge amounts of gold. With gold prices rising, such risks increase.
The World Gold Council (WGC) has also warned about purity risks — even if you give 999 purity gold, some traders may return gold of lesser purity.
Before giving gold to private firms, you must thoroughly verify their reputation and reliability.
Companies like SafeGold, Monetary Metals, and GoldStorm claim:
- They verify purity with RFID and advanced technology.
- Every piece of jewellery made from leased gold gets RFID tagging.
- Cameras and sensors track stock.
- Insurance covers theft or employee fraud.
Gold leasing has existed in West Asia since 2006.
How to Use the Gold Monetization Scheme
Anyone who completes KYC at a bank can open a Gold Deposit Account.
Steps:
- Gold is collected by a bank-authorized Collection & Testing Centre.
- It is melted, purified (999), and weighed.
- Interest is paid based on the gold value deposited.
SBI interest rates:
- 1 year: 0.50%
- Up to 2 years: 0.55%
- 3 years: 0.60%
Earlier, medium-term (5–7 years) and long-term (12–15 years) deposits had 2.25% and 2.5% interest respectively, but they were discontinued in March this year.
Banks accept:
- Minimum 10 grams
- Jewellery
- Coins
- Gold bars
(Stone weight in jewellery is not counted)
After maturity, you get back the same amount of pure gold or equivalent value in cash. Interest is paid annually on March 31 or at maturity.
With government banks, you don’t have to worry about safety.
