Govt withdraws gold monetisation scheme, short-term deposits to continue

The Union Finance Ministry on Tuesday announced the discontinuation of the medium and long term government deposit (MLTGD) components of the Gold Monetisation Scheme (GMS) from March 26. 

 

This decision comes after a comprehensive review of the scheme’s performance and evolving market conditions, according to the finance ministry statement.

 

The GMS, launched on September 15, 2015, aimed to reduce the country’s dependency on gold imports and mobilise the vast gold holdings of households and institutions for productive use.

 

The scheme initially consisted of three components — short-term bank deposits (1-3 years), medium-term government deposits (5-7 years), and long-term government deposits (12-15 years).

 

 

In light of the revised framework, deposits under the medium-term and long-term government deposit components will no longer be accepted at designated collection and purity testing centres (CPTC), gold monetisation scheme collection & testing agents (GMCTA), or at bank branches, from March 26.

 

However, existing deposits under these components will continue until redemption, in line with the current guidelines as stipulated in the Reserve Bank of India’s (RBI’s) master direction.

 

“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,” said the finance ministry statement.

 

This shift in policy underscores the government’s ongoing efforts to refine the GMS and adapt it to the evolving financial landscape, while maintaining focus on gold’s role in the economy.