Key Highlights
- The Government of India will stop accepting new medium‑ and long‑term deposits under the Gold Monetisation Scheme (GMS) from 26 March 2025.
- Short‑term deposits (1‑3 years) may still be opened at banks’ discretion.
- Existing medium‑ and long‑term deposits will be honoured until they mature, as per RBI clarification.
- Since its inception in 2015, the scheme mobilised more than 31,000 kg of gold, but the government cites shifting market dynamics and limited impact on import reduction.
- Sovereign Gold Bonds have also been discontinued, with the government turning to duty rationalisation to stimulate demand.
Detailed Insights
The Gold Monetisation Scheme, launched in November 2015, was designed to channel idle gold holdings—bars, coins and jewellery (excluding stones and other metals)—into the formal financial system. Participants could deposit a minimum of 10 g of raw gold without any upper limit. Deposits were sorted into three buckets:
- Short‑term Bank Deposits (STBD): Tenure of 1‑3 years, interest set by the bank in line with global lease rates.
- Medium‑term Government Deposits (MTGD): Tenure of 5‑7 years, fixed interest of 2.25 % per annum payable by the government.
- Long‑term Government Deposits (LTGD): Tenure of 12‑15 years, fixed interest of 2.5 % per annum payable by the government.
By November 2024, the scheme had attracted 5,693 depositors, mobilising 31,164 kg of gold: 7,509 kg in short‑term, 9,728 kg in medium‑term and 13,926 kg in long‑term instruments. Despite these figures, the government concluded that the scheme’s contribution to curbing gold imports and the current‑account deficit had been modest. Consequently, all new medium‑ and long‑term deposits will be barred after 26 March 2025, while banks may continue to offer short‑term products.
The Reserve Bank of India affirmed that already‑existing MTGD and LTGD accounts will continue to earn the stipulated interest until they reach maturity, and premature withdrawals remain permissible under the original terms. No roll‑over of these categories will be permitted.
Parallelly, the Sovereign Gold Bond programme was also phased out owing to high issuance costs, and the 2025‑26 budget refrained from authorising fresh bonds. Instead, the government opted to rationalise import duties to stimulate domestic gold consumption. Notably, gold prices surged 41.5 % in 2024, touching ₹90,450 per 10 g on 25 March 2025.