For two weeks now, the gold market has been holding its breath. Sources-based reports say the Centre is about to announce a revamped Gold Monetisation Scheme — jewellers as "collection partners," over 1,000 tonnes to be mobilised, an announcement "within the next two weeks." The trigger, supposedly, is the Prime Minister's appeal to citizens to defer gold purchases for a year. Industry bodies have obligingly supplied the dream math: monetise even 5% of India's 25,000-tonne household hoard and you unlock $90 billion in liquidity.
People familiar with the government's thinking, however, say no such scheme is coming. And here is the uncomfortable part for everyone drafting anticipatory press releases: none is required. The monetisation of Indian household gold has already begun — not through a ministry, but through MCX circular no. MCX/PMT/375/2026, issued on July 1 and effective July 13, which almost nobody outside the bullion trade bothered to read.
What the circular actually does
The circular, issued in continuation of MCX's May revision of its Good Delivery Norms for BIS-standard gold, empanels three domestic refiners — M. D. Overseas, Kundan Refinery, and Zaveri and Company — and expands the good-delivery list of four existing ones — Titan (Tanishq), Augmont, Parker Precious Metals and Sovereign Metals — across all of MCX's gold futures contracts, including, critically, the benchmark 1kg Gold contract. Seven Indian refiners can now deliver serially numbered, 995-purity bars to settle India's most liquid gold contract, alongside LBMA suppliers.
Read past the annexures and the significance is hard to miss. These refiners do not mine gold. Their raw material is overwhelmingly recycled — old jewellery, coins, scrap — bought from households, jewellers and aggregators in the open market. Until now, the output of that recycling loop lived in the opaque physical trade.
From July 13, it terminates in a compulsory-delivery futures contract with transparent, exchange-discovered pricing, staggered tender, random allocation and a clearing corporation guaranteeing settlement. A gram of gold sitting in a household locker in Rudrapur or Rampura now has a complete, auditable route to the formal financial system: refiner buys it, melts it to a BIS-standard bar, delivers it at Ahmedabad, Mumbai or New Delhi against a GOLD futures short. No bank branch. No deposit receipt. No interest-rate haggling. No scheme.
The economics have already aligned. With import duty pushing landed costs of foreign gold higher, recycled domestic metal is the cheapest feedstock a refiner can find — and after the Prime Minister's deferral appeal, jewellers report that 40-60% of their business has shifted to recycling and exchange of old gold. The supply is walking in the door. The MCX circular gives it somewhere institutional to go.
The scheme that failed twice is being sold a third time
Set that against the record of the instrument the government keeps promising to revive. The Gold Monetisation Scheme was launched in 2015 with precisely today's pitch: cut imports, trim the current account deficit, put idle household gold to work. A decade later, the Finance Ministry's own numbers show roughly 38 tonnes mobilised — against household holdings estimated at 25,000 tonnes. That is a strike rate of about 0.15%. In March 2025, the government quietly euthanised the scheme's medium- and long-term deposits, renewals included, leaving only short-term bank deposits on life support.
Nor is "bring in the jewellers" a new idea. It is the same idea, recycled with less care than the gold. RBI's April 2021 amendments to the GMS did exactly this — jewellers and refiners could become Collection and Purity Testing Centres and Gold Mobilisation Collection Testing Agents, with banks paying up to 1.5% in handling incentives. The architecture existed. The acronyms existed. The gold did not move, because the scheme's core proposition never survives contact with an Indian household: hand your jewellery to a bank to be melted, in exchange for 2.25-2.5% interest and a tax trail, and get back a bar — not your bangles. Households declined, rationally, for ten straight years. Renaming CPTCs as "collection partners" does not change the answer; it changes the press release.
The 1,000-tonne projection deserves particular contempt. It asks the public to believe that a framework which mobilised 38 tonnes in ten years will mobilise twenty-six times that because jewellers — who were already inducted in 2021 to no effect — will this time be called partners rather than agents. No mechanism reported so far explains where the additional zero comes from.
The market didn't wait for Delhi
The deeper story is about who solved the problem. Gold monetisation was always a plumbing problem wearing a policy costume: household gold needed a trusted assayer, a standard product, a transparent price and a guaranteed buyer. The GMS tried to make banks provide all four; banks, with no natural business in melting mangalsutras, provided none well. The refiner-to-exchange pipeline provides all four by construction — BIS-standard purity, serially numbered bars, polled spot-linked settlement prices, and a clearing corporation as counterparty. The household doesn't earn 2.5% on a deposit; it gets a full, immediate, exchange-referenced value for metal it was never going to deposit anyway. That is not a lesser form of monetisation. It is the only form that has ever worked at scale anywhere: recycling into a liquid market.
There is an irony worth savouring. The same policy establishment now drafting a third GMS spent this month tightening bank exposure to capital markets — the RBI's new collateral directions that have crushed exchange volumes since July 1. With one hand, the regulator is pulling banks out of market plumbing; with the other, the government proposes to push banks (and now jewellers reporting to banks) back into the gold-collection business they have failed at twice. Meanwhile the exchange ecosystem, on its own initiative and under existing SEBI regulation dating to 2019, closed the loop without asking for a rupee of incentive, a tax break, or a launch event.
If the government wants to help, the honest to-do list is short and unglamorous: rationalise the capital-gains treatment of gold sold for recycling, keep BIS assaying credible, and let the empanelled-refiner list grow. What the market does not need is a fourth iteration of a scheme whose decade-long output could fit in a single mid-sized bank vault — announced, once again, two weeks from now.
The gold is already moving. It is moving through Changodar, Manesar, Hosur and Naroda, into 995 bars, onto MCX. Somebody should tell the sources of the news media reports on gold monetisation.
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MCX circular no. MCX/PMT/375/2026 dated July 1, 2026, effective July 13, 2026, in continuation of circular MCX/PMT/292/2026 dated May 17, 2026. GMS mobilisation figures per Ministry of Finance data to March 2025. The claim that no revamped scheme announcement is forthcoming is based on people familiar with the matter. |
