The Finance Ministry has begun a review of the Gold Monetisation Scheme to make it more attractive not only for customers but also banks that offer it. It is also re-examining the Sovereign Gold Bond Scheme for a bigger roll out in 2016-17.

“The objective is to devise a mechanism that will ensure that the scheme adds to the bottomline of banks. At present, most banks don’t view the Gold Monetisation Scheme as an attractive option and so don’t push it with customers,” said a senior government official, adding that subsequently, interest rates offered by them on the scheme are very low, ranging between 1 per cent and 2 per cent on an average.

Sources said the Finance Ministry and the Reserve Bank of India are in talks to tweak the Gold Monetisation Scheme (GMS) to incentivise banks.

One of the options on the drawing board is to help cut down the logistics costs for banks in terms of purity by permitting them to deposit the gold directly at refineries rather than with the collection and purity centres.

Simultaneously, the Finance Ministry is also looking to tweak the Sovereign Gold Bond Scheme before it rolls it out on a larger scale from next fiscal.

The Centre plans to raise ₹15,000 crore this fiscal through the sovereign gold bond scheme by trimming down its market borrowing programme for the second half of the fiscal.

“We are reviewing the Sovereign Gold Bond Scheme to ensure it is more investor-friendly and does not impact the government borrowing programme from 2016-17,” said another official.

Launched by Prime Minister Narendra Modi in November last year, the GMS and the Sovereign Gold Bond schemes aim at cutting down the huge demand for the precious metal. But while the GMS has seen a tepid response, investors have found the gold bond scheme reasonably attractive.

Subscribers under the GMS can deposit a minimum of 30 grams of gold bullion or jewellery in a gold deposit account and earn interest on it. Similarly, investors can buy sovereign gold bonds in denominations of two, five and 10 grams of gold for differing tenors.