Gold Monetisation Scheme: Govt Discontinues Long-term and Medium-term Deposits

Moneylife Digital Team 26 March 2025

Investor Interest

The Union government has announced the discontinuation of the medium-term and long-term government deposit (MLTGD) components of the gold monetisation scheme (GMS), effective 26 March 2025. The decision, based on a review of the scheme’s performance and evolving market conditions, marks a significant shift in India’s gold policy.

Launched on 15 September 2015, GMS aimed to mobilise idle gold held by households and institutions, reducing India’s dependency on gold imports while promoting its use in productive economic activities.

The scheme included three components: short-term bank deposit (STBD) (1-3 years), medium-term bank deposit for five to seven years and long-term government deposit (MLTGD) for a duration of 12-15 years.

As of November 2024, GMS had mobilised about 31,164kg (or 31.16 metric tonnes) of gold from around 5,693 depositors. This total includes 7,509kg in STBD, 9,728kg in MTGD and 13,926kg in LTGD.

The government’s decision follows an assessment of the scheme’s performance and changes in market dynamics. While the GMS was designed to encourage gold deposits, the medium and long-term deposit components reportedly saw lower participation compared to short-term deposits.

No new deposits under the medium and long-term categories will be accepted at designated collection and purity testing centres (CPTCs), GMS mobilisation, collection & testing agents (GMCTAs), or designated bank branches from 26 March 2025, the government says.

Existing deposits under MLTGD will remain valid until their scheduled redemption, as per the Reserve Bank of India’s (RBI) guidelines.

The government has clarified that STBD will remain available under the scheme. However, individual banks will determine their continuation based on commercial viability. Further details regarding these deposits are expected in upcoming RBI guidelines.

The decision to streamline the Gold Monetisation Scheme aligns with broader economic objectives, potentially leading to increased focus on short-term deposits, which have been more popular among depositors. A shift in gold investment trends, as long-term depositors may seek alternative investment avenues. Potential changes in gold import policies, as the government continues to monitor gold demand and reserves.

While the long-term impact remains to be seen, the move signals a policy recalibration to enhance efficiency in gold monetisation.

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