Government Ends Gold Monetisation Scheme: RBI’s Update on Existing Deposits

The Government of India has decided to discontinue the Gold Monetisation Scheme (GMS) for medium- and long-term deposits from March 26, 2025. The decision was based on evolving market conditions and the performance of the scheme. However, short-term deposits will continue at the discretion of banks. The Reserve Bank of India (RBI) has clarified that existing deposits under the scheme will remain unaffected until their maturity.

Key Points

About the Gold Monetisation Scheme (GMS)

• Launched in November 2015 to mobilize idle gold and integrate it into the formal economy.
• Aimed at reducing India’s gold imports and current account deficit.
• Revamped version of the previous Gold Deposit Scheme.
• Allowed households, trusts, and institutions to deposit gold with banks.
• Minimum deposit requirement: 10 gm of raw gold (bars, coins, jewellery excluding stones/other metals).
• No maximum deposit limit.

Three deposit categories

• Short-term Bank Deposits (STBD): 1-3 years, managed by banks.
• Medium-term Government Deposits (MTGD): 5-7 years, backed by the government.
• Long-term Government Deposits (LTGD): 12-15 years, backed by the government.

Interest Rates on Deposits

• Short-term deposits: Interest decided by banks based on international lease rates and market conditions.
• Medium-term deposits: Fixed at 2.25% per annum (borne by the government).
• Long-term deposits: Fixed at 2.5% per annum (borne by the government).

Government’s Decision to End the Scheme

• Medium- and long-term deposits discontinued effective March 26, 2025.
• Short-term deposits will continue under banks’ discretion.
• Government cited evolving market conditions and scheme performance as reasons for closure.
• No new deposits accepted at collection centers or banks from March 26, 2025.

RBI’s Statement on Existing Deposits

• RBI confirmed that existing medium- and long-term deposits will continue until maturity.
• Premature withdrawal is allowed under existing provisions.
• No renewal of medium- and long-term deposits after March 26, 2025.

Gold Collected Under the Scheme

• Total gold mobilized till November 2024: 31,164 kg.
• Short-term deposits: 7,509 kg.
• Medium-term deposits: 9,728 kg.
• Long-term deposits: 13,926 kg.
• 5,693 depositors participated in the scheme.
• Contributions from individuals, Hindu Undivided Families (HUFs), temples, trusts, mutual funds, ETFs, and firms.

Status of Other Gold Schemes in India

• Sovereign Gold Bonds (SGBs) were also discontinued due to high costs.
• No fresh issuance of gold bonds in Budget 2025-26.
• Government rationalized gold import duty instead to boost gold demand.
• Gold prices surged 41.5% in 2024, reaching ₹90,450 per 10 gm (March 25, 2025).