Digital gold is real gold that you buy on your phone in very small amounts, even ₹10 at a time, and that is stored in a vault in your name. Many apps also let you save in digital gold every day, by debiting a small fixed amount from your bank account.
Here is how it works. The app works with a gold company, which buys the gold and stores it. You buy at the live price of gold, plus 3% GST. The gold is 24 carat, usually 99.5% to 99.99% pure. An independent trustee checks regularly that the gold in the vault matches the total amount that the customers have bought. Your holding is shown in grams in the app.
Say a delivery rider in Indore decides to save ₹30 a day. He sets up UPI Autopay, an instruction that lets the app debit his bank account automatically, from his UPI payment app. Each morning, ₹30 is debited through UPI and turned into gold. At a price of ₹14,000 a gram, ₹30 buys about 0.002 grams, after the 3% GST is taken out. After a year, he has paid in ₹10,950. Depending on the price of gold through the year, this buys roughly three-quarters of a gram. He can sell his gold back to the app at any time, and the money is credited to his bank account. Once he has saved enough, he can also ask for a gold coin to be delivered to his home.
There is one important caution. Digital gold is not regulated by SEBI or by the RBI. If the gold company fails, the buyer depends on the company and the trustee, not on a regulator. SEBI has warned investors about this. Gold ETFs are a regulated alternative. Their units trade on the stock exchange, like the units of index funds and ETFs, and each unit is backed by gold held for the fund.
Gold also matters for borrowing in India. Families often pledge their gold jewellery for a gold loan. Digital gold apps make the opposite step easy: saving small amounts until they become real gold. Saving in this way is one part of personal finance on a phone.