Indians have always had an appetite for gold as a popular investment avenue. It is widely trusted as a safe way to store wealth. Clinching on this opportunity, Jewellers and financial intermediaries alike, periodically create innovative schemes and products to cater to this thirst for gold. Though it has made investment in gold more accessible and feasible for investors, several red flags have emerged.

One such scheme widely popular across the country is the gold deposit scheme. It is a savings programme, offered across the country by jewellers, both big and small, from branded chains to local jewellery shops in towns and villages. In such a scheme buyers have to deposit a fixed amount of money to the jeweller for 11 months and at the end of the year, they could purchase the gold jewellery worth the accumulated amount along with other incentives provided by the jeweller. In its essence, this scheme is just like any other deposit schemes through which jewellers raise money. Though many such schemes run by big jewellers are completely regulated, jewellers who form the bulk- sole proprietors and partnership firms operate in complete regulatory vacuum. Some have duped their clients, committed fraud and attracted the attention of the regulators.

In February 2019, government of India introduced the ‘Banning of Unregulated Deposit Scheme Ordinance’ to save investors from losing money on fake schemes and to take action against fraudulent individuals and firms for offering such unregulated deposit schemes. According to the ordinance any amount of money received by way of advance or loan, by any deposit taker with a promise to return either in cash or kind, with or without any benefit will be treated as a deposit and thus be subject to regulations. Accordingly, money raised by jewellers through a gold scheme whether an individual, a proprietorship, a partnership firm, a company or a co-operative would fall within the ambit of this ordinance.

Though it initially appears that this ordinance covers all such unregulated schemes, it turns out that many schemes run by jewellers could still be out of its net. There is a loophole in the form of an exception. Amounts raised from relatives as loans and advance payments for supply of goods by a business is not treated as a ‘deposit’, thus jewellers claim that their gold schemes are a trade advance and  any regulations that are subjected to unregulated deposits do not apply to them. Experts agree that there is still lack of clarity and ambiguity with the ordinance which leaves scope for manipulation and multiple interpretations, leaving these schemes still unregulated.

Deposit schemes run by banks, NBFC’s, companies or mutual funds are regulated by bodies like RBI, SEBI, Ministry of Corporate Affairs (MCA) etc. So if an individual is ever duped in their schemes, there is a platform available for grievances redressal and scope for legal recourse. But for unregulated gold schemes, no such regulatory body exists and the lack of clarity in the ordinance leaves investors with no option for legal recourse if they are ever subject to fraud, leaving them high and dry.

Therefore one should be careful while buying into these schemes. As a buyer one needs to be aware of various risks involved in case if the jewellers fail to adhere by the terms and conditions. Select only reputed jewellers, diversify across jewellers and ensure you have all the receipts, documents and payment records shared by the jeweller. As you will keep hearing on PIE, schemes that appear too good to be true usually are.



  1.       Nirmal, R. (2019, April 7). Beware of gold savings schemes! Retrieved from
  2.       (2019, May 6). All you need to know about gold savings schemes. Retrieved from
  3.       Borate, N. (2019, March 11). Govt bans unregulated deposits offered by builders, jewellers. Retrieved from