The government has decided to discontinue parts of the Gold Monetisation Scheme (GMS) from March 26, 2025, the Union Finance Ministry announced earlier today. The ministry said that the decision has been take after reviewing the scheme’s performance and evolving market conditions.
Scheme Components Affected: What’s Ending and What’s Continuing?
The Gold Monetisation scheme comprised of 3 components-
- Short term bank deposit (1-3 years)
- Medium term government deposit (5-7 years)
- Long term government deposit (12-15 years).
In today’s announcement, the medium term government deposit and long term government deposit components have been discontinued but the individual banks can continue the short term gold deposit scheme (1-3 years) at their own discretion and commercial viability. .
A press release issued by the Finance Ministry noted “While the MLTGD components are being discontinued, the short-term bank deposit (STBD) option will remain available. However, its availability will depend on the individual bank’s commercial viability assessments. The RBI is expected to release detailed guidelines on this in due course,”.
Starting today, any gold deposits made at the approved collection centres, testing centres or designated bank branches under the medium and long term deposit scheme will not be accepted, the ministry further noted.
What will happen to existing deposits?
The existing deposits under the medium term and long term government deposit schemes will continue until maturity or redemption. Today’s decision does not affect short term deposits.
Those still wanting to apply for the short term gold deposits under the gold monetisation scheme will have to check with the bank if the bank is still offering the scheme. If yes, then you will have to furnish the required documents for the KYC and visit bank’s designated collection and testing centre to get your gold assessed and test for purity. The bank will then process your application after verifying the gold’s quality and quantity and open the account for gold deposit scheme.
Why the scheme is being discontinued?
The Indian government had launched the Gold Monetisation Scheme (GMS) in 2015 to reduce the country’s dependence on gold imports and aiming to encourage the people and institutions, even temples to deposit their excess gold with banks and earn interest and tax benefits.
According to the reports, around 5,693 depositors have participated in the scheme since its launch. And approximately 31,164 kilograms of gold have been deposited under the scheme till November 2024 that includes 7,509 kilograms for short term deposit, 9,728 kilograms for medium term deposit, and 13,926 kilograms for long term deposit.
The price of 24-carat gold was roughly around Rs 26,000 per 10 grams in November 2015 when the scheme started. The gold price is about Rs 90,000 per 10 grams as of today.
While the scheme saw initial interest as a way to earn from idle gold, Indians traditionally prefer holding physical gold which caused a waning participation in the scheme. Also, the operational costs to banks on managing, refining and processing the deposited gold proved to be costly.