Malabar Gold & Diamonds backs Modi’s call on responsible gold use, seeks overhaul of monetisation scheme

Kolkata: Malabar Gold & Diamonds has submitted a comprehensive proposal to the government recommending strategic enhancements to the Gold Monetisation Scheme (GMS), expressing its support to Prime Minister Narendra Modi’s appeal on responsible gold consumption and the need to strengthen India’s economic resilience through better utilisation of domestic gold resources.

The proposal, submitted by M.P. Ahammad, chairman, Malabar Group, to the Union Finance Minister Nirmala Sitharaman and Union Commerce & Industry Minister Piyush Goyal, outlines practical measures aimed at increasing public participation in GMS, mobilising idle gold into the formal economy, and encouraging greater recycling, reuse, and circulation of existing gold within India.

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India imports nearly 700–800 tonnes of gold annually, resulting in significant foreign exchange outflows and pressure on the current account deficit. At the same time, Indian households and institutions are estimated to hold nearly 25,000–35,000 tonnes of gold in the form of jewellery, coins and bars, much of which remains economically idle.

Malabar Gold & Diamonds stated that greater focus on recycling, exchange, reuse, and monetisation of existing domestic gold can play an important role in reducing import dependency, limiting dollar outflow, and strengthening the Indian economy over the long term.

Commenting on the proposal, M.P. Ahammad, Chairman, Malabar Group, said: “India possesses one of the world’s largest privately held gold reserves while continuing to rely significantly on imports to meet domestic demand. With appropriate policy support and active integration of the organised jewellery sector, the Gold Monetisation Scheme can emerge as a highly effective mechanism for mobilising idle gold into the formal economy.”

The proposal notes that while the Gold Monetisation Scheme was introduced to reduce import dependence and monetise idle domestic gold holdings, public participation remained limited due to longer lock-in periods, lower perceived returns, limited redemption flexibility, and procedural challenges.

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To improve effectiveness and adoption of the scheme, Malabar Gold & Diamonds has recommended integration of organised jewellers into the GMS framework under regulatory oversight, reduction in minimum deposit quantity from 10 grams to 1 gram, flexible redemption options in either gold weight or cash, lower lock-in periods and improved liquidity option and simplified Aadhaar-based e-KYC procedures.

The proposal also recommends a jeweller-assisted collection and facilitation framework operating under bank and regulatory supervision, with digital tracking systems and transparent processing mechanisms to improve customer confidence and operational efficiency.

According to the proposal, mobilisation of even 1–2% of India’s domestic gold holdings could potentially release nearly 600–700 tonnes of gold into circulation, equivalent to a substantial portion of the country’s annual gold import demand.