NEW DELHI–The government will pay banks a 2.5 percent commission for mobilising gold under the gold monetisation scheme and depositors will be permitted premature withdrawal of the precious metal deposited, an official statement said on Sunday.

“The banks would be getting a 2.5 percent commission for the scheme which will include the charges payable to the collection and purity-testing Centres/Refiners,” the finance ministry said in a statement on the gold monetisation scheme.

“It is expected that the modifications will make the scheme more attractive for potential depositors,” it said.

As per the revised guidelines, the government will pay participating banks a fee services like gold purity testing, refining, storage and transportation on medium and long term gold deposits.

Premature redemption have been now permitted under medium and long-term government deposits.

The monetisation scheme encourages individuals, households and temples to deposit gold jewellery or bars with banks or collection agents. The gold deposited would be later refined for domestic purpose and would help cut dependence on imports.

“Any Medium Term Deposit will be allowed to be withdrawn after three years and any Long Term Deposit after five years. These will be subject to a reduction in the interest payable,” the statement said.

Besides, gold depositors can now give the metal directly to the refiner, instead of only through the Collection and Purity Testing Centres (CPTCs).

“This will encourage the bulk depositors, including institutions, to participate in the scheme,” the statement added.

The finance ministry said the gold monetisation scheme, launched by Prime Minister Narendra Modi last November, provides for tax exemptions on interest earned on the gold deposited and exemption from capital gains made through trading or at redemption.

Bureau of Indian Standards (BIS) has modified the licensing condition for refiners from the existing three years of refining experience to one year towards making the scheme more attractive, it added.

“BIS has published an Expression of Interest (EOI) on its website inviting applications from more than 13,000 licensed jewellers to act as a CPTC in the scheme, provided they have tie-up with BIS licensed refiners,” the statement added.

The government has mobilised around 900 kg of gold in over two-and-a-half months’ time through the scheme, which pays depositors interest of up to 2.50 percent per annum.

In an effort to make the scheme more customer-friendly, the Reserve Bank of India (RBI) said earlier this week that depositors will be able to withdraw medium-term (5-7 year) and long-term government deposits (12-15 years) pre-maturely after the minimum lock-in period, albeit with a penalty.