India's Gold Monetisation Scheme and Its Link to Hallmarking Infrastructure

On 15 September 2015, the Government of India launched the Gold Monetisation Scheme (GMS) — a programme designed to mobilise the estimated 25,000 tonnes of idle gold held by Indian households and institutions. The scheme's implementation revealed a deep dependence on hallmarking infrastructure that reinforced the strategic importance of India's Assaying and Hallmarking Centre (AHC) network.

How the Scheme Worked

Under the GMS, individuals and institutions could deposit their gold with designated banks. The gold would be tested for purity, melted, and credited to the depositor's account in terms of 995-fineness gold equivalent. Depositors earned interest on their gold deposits, and the gold re-entered the productive economy.

The Role of Hallmarking Centres

The critical first step was purity testing — and for this, the government turned to BIS-recognised AHCs. Forty-eight hallmarking centres were qualified as Collection and Purity Testing Centres (CPTCs) under the scheme. These CPTCs were responsible for accepting gold from depositors, testing its purity using XRF spectrometry and fire assay, issuing purity certificates, and facilitating the handover to banks.

This was perhaps the most direct demonstration that hallmarking centres were not merely jewellery quality checkpoints but essential financial infrastructure — trusted intermediaries whose test results determined the value of deposits worth crores of rupees.

World Gold Council Support

The World Gold Council — the same organisation that had partnered with BIS to launch hallmarking in 2000 — supported the GMS initiative. The WGC publicly stated that "a national hallmarking system is an essential component of a successful gold monetisation scheme in India."

This endorsement underscored a broader point: hallmarking infrastructure has economic utility far beyond consumer protection. It underpins the integrity of gold as a financial asset.

Challenges and Limitations

Despite its ambitions, the GMS saw limited uptake. Cultural attachment to physical gold, concerns about tax scrutiny, low interest rates, and logistical barriers all contributed to modest deposit volumes. However, the scheme did establish the principle that AHCs could serve multiple functions within India's gold ecosystem.

Infrastructure Legacy

The GMS experience influenced subsequent policy decisions. It demonstrated that India needed a much larger, more geographically distributed network of testing centres. When mandatory hallmarking was implemented in 2021, the expansion of the AHC network — from roughly 945 centres to over 1,600 by 2025 — reflected lessons learned from the GMS era.

Looking Ahead

As India continues to develop its gold market infrastructure — including discussions around a domestic gold exchange, gold-backed financial products, and mandatory bullion hallmarking — the role of assaying centres as trusted intermediaries will only grow. The GMS experience established that hallmarking is not just about consumer protection; it is about building the institutional trust infrastructure that a sophisticated gold market requires.