India has decided to discontinue parts of its gold monetisation scheme, which had encouraged households and institutions to deposit idle gold in exchange for interest payments. The scheme, which was introduced in 2015, offered the option of gold deposits for 1-to-3 years, 5-to-7 years, and 12-to-15 years.
The finance ministry announced late on Tuesday that the 5-to-7 year and 12-to-15 year deposit options will no longer be available, citing evolving market conditions and the scheme’s performance.
“Based on the examination of the performance of the Gold Monetisation Scheme (GMS) and evolving market conditions, it has been decided to discontinue the Medium Term and Long Term Government Deposit (MLTGD) components of the GMS w.e.f. March 26, 2025,” Ministry of Finance release stated.
“Any gold deposits tendered at the designated Collection and Purity Testing Centre (CPTC) or GMS Mobilisation, Collection & Testing Agent (GMCTA) or the designated bank branches under the said components of GMS shall not be accepted with effect from March 26, 2025,” the release added.
Banks will still be able to offer short-term gold deposits, but these will be based on commercial viability.
This move is expected to reduce the government’s future financial commitments and mitigate risks associated with fluctuating gold prices, according to a Reuters report. While banks previously paid interest on short-term deposits, the government was responsible for paying interest on the medium- and long-term deposits.
Gold, which is often seen as a safe haven during geopolitical and economic uncertainty, has risen more than 15% this year, driven by global tensions and concerns over US tariff policies.
The finance ministry assured that existing gold deposits will remain intact until maturity, and the Reserve Bank of India has amended its master directions on the scheme to reflect these changes.
“Further, the Short-Term Bank Deposits (STBD) offered by the banks under GMS shall continue at the discretion of the individual banks based on the commercial viability as assessed by them. The detailed guidelines of Reserve Bank in this regard shall follow,” said the Finance Ministry