What is a Gold Savings Scheme (11+1)?
Discover how gold savings schemes (like 11+1) work. Learn about monthly installments, maturity benefits, and why jewellers and customers love them.
The Concept of Gold Savings Schemes
A Gold Savings Scheme, often called Swarna Yojana or Bhishi in local terms, is a structured savings plan offered by retail jewellers. It allows customers to pay a fixed amount every month for a set period (usually 11 months). At the end of the term, the jeweller contributes a bonus—typically equivalent to one month's installment—and the customer can purchase jewellery worth the total accumulated amount.
How the 11+1 Model Works
The most common format is the '11+1' scheme. If a customer commits to saving ₹5,000 per month, they will pay ₹5,000 for 11 months, totaling ₹55,000. In the 12th month, the jeweller adds a ₹5,000 bonus. The customer now has ₹60,000 to spend on jewellery in that shop. Some schemes offer a discount on making charges instead of a cash bonus, while others lock in the gold rate on the day of payment.
Why Customers Opt for These Schemes
Gold jewellery is a significant investment. For middle-class families planning for a wedding or an anniversary, depositing a lump sum of ₹1-2 lakhs is difficult. The scheme forces disciplined saving. Furthermore, the bonus or discount provided by the jeweller yields a return that often beats standard bank recurring deposits, provided they actually buy jewellery.
Why Jewellers Love Savings Schemes
For the jeweller, these schemes ensure guaranteed future sales and customer retention. The monthly deposits act as interest-free working capital, helping the jeweller expand inventory or manage cash flow. It also builds a sticky relationship; a customer in a scheme is highly unlikely to buy from a competitor.
Regulatory Aspects and Management
Such schemes are regulated by the Banning of Unregulated Deposit Schemes (BUDS) Act and Companies Act rules. Jewellers cannot offer cash returns; the maturity amount must be redeemed against jewellery. Managing hundreds of passbooks, sending payment reminders, and tracking maturities is complex. Software designed for scheme management automates these tasks, providing a seamless digital passbook experience via SMS or WhatsApp.