Gold Monetization scheme India- a way to avoid hassle of keeping physical gold

Seven FAQs on Gold Monetization Scheme 1. What kind of gold can be deposited under the scheme? What is the minimum and maximum quantity which can be deposited? Gold in any form, bullion or jewelry can be deposited. However jewelry with embedded stones are not be accepted. The minimum amount of gold which will be accepted as a deposit is 30 grams of 995 fineness. There is no upper limit for deposition. 2. What will be the tenure of deposit? The tenure for deposit has been distributed into three term plans which are as follows: i. Short term: 1 to 3 years ii. Medium term: 5 to 7 years iii. Long term: 12 to 15 years The investor will be allowed to break the deposit during the lock-in period by paying a penalty for premature withdrawal. 3. What will be the interest rate payable on the deposit? Initially it was proposed that the amount of interest rate payable for deposits made for the short-term period would be decided by banks and would be denominated in grams of gold. For the medium and long-term deposits, the rate of interest (and fees to be paid to the bank for their services) will be decided by the government, in consultation with the RBI from time to time. The interest rate for the medium and long-term deposits will be denominated and payable in rupees, based on the value of gold deposited. As of now the rate of interest is 2.25 per cent on the current price of gold for the short term and 2.5 percent for the medium and long term deposits. The interest is taxable. 4. Who is eligible to deposit under the gold monetization scheme? Is joint deposit allowed? Deposits can be made by residents of India, HUFs', mutual funds and exchange trading funds registered under SEBI. Yes, joint deposits are allowed with a minimum of two holders with no cap on the maximum number. 5. Where can the deposit be made? The deposit of gold can be made at any scheduled bank as per the list of scheduled banks under the Reserve Bank of India. 6. How will the authenticity of the gold be verified? A total of 331 Assaying and Hallmarking Centers', spread across various parts of the country, which meet criteria as specified by Bureau of Indian Standards (BIS) have been enlisted by the government. These centers have been entrusted with the task of Collection and testing for purity of gold, for the purpose of this scheme. 7. How to open an account for gold monetization? Individuals willing to open a gold deposit account have to do so with a scheduled bank as listed under RBI guidelines. The nature of the account would be similar to normal zero balance saving bank accounts. The documents which are required to open the account are also the same as those required for any savings bank account opening viz. customer (KYC) form along with valid address proof, ID proof and passport size photograph.

The RBI, in Jan 2016, made a few amendments to its Master Direction on the scheme.
"The depositors will be able to withdraw medium term and long term government deposits pre-maturely after the minimum lock-in period of three years in the case of medium term deposits and after five years in the case of long term deposits," it said. However, there will be penalty in the "form of lower rate of interest for premature withdrawals" depending upon the actual period for which the deposit has run.

Ref:
http://www.moneycontrol.com/news/commodity/7-things-to-know-aboutgold-monetization-scheme_5726761.html

http://profit.ndtv.com/news/industries/article-gold-monetisation-scheme-premature-withdrawal-allowed-by-rbi-1268601