The Reserve Bank of India (RBI) recently permitted premature withdrawal of deposits under gold monetisation scheme even before lock-in period lapses, but only in case of death of depositors.
Even earlier also, premature withdrawal was allowed but only after the lock-in period.
The medium-term gold deposit (MTGD) scheme has a lock period of three years and long term gold deposit (LTGD) scheme has five years of lock-in.
With the new rules in force, the family members of deceased depositors will be allowed to withdraw the deposits, foregoing some interest.
In the MTGD scheme, with a three-year lock-in, if the deposits are withdrawn within a period of six months, interest will not be paid. At the same time, for withdrawal after six months but before one year, the applicable rate would be 1.25 percent less than the original rate of interest.
But if the depositor’s kin withdraw after one year but before two years, deposit rates would fall by one percent. At the same time,
Any withdrawals made between two years and three years would cut the interest rate by 0.75 per cent.
Long term gold deposit scheme
Likewise, interest would be deducted for a LTGD scheme which has a five-year lock in, and the current interest rate at 2.50 per cent per annum.
In case withdrawals happen in the first year of deposit, the depositor's family will not be eligible for any interest. And when the withdrawal happens between one to two years, interest rates would fall by 1 per cent. Between two years to three years, the payable interest minus 0.75 percent would be paid. And for withdrawals taking place between three to five years, the payable interest would be 0.25 per cent less.
One might wonder whether withdrawals made after the lock-in period are allowed without any penalty charges. As a matter of fact, the medium-term gold deposits have a lock-in period of three years but their tenure is between 5-7 years.
Similarly, for long term gold deposits, the lock period is five years, but the total tenure is 12-15 years.
So, even when the withdrawal takes place after the lock-in period, it is seen as premature and the depositor’s kin would be liable to penalty charges.