Gold Monetisation Scheme

GS III-ECONOMY

Latest Update on Gold Monetisation Scheme

The Indian government has decided to discontinue Medium-Term and Long-Term Government Deposits (MLTGD) under the Gold Monetisation Scheme (GMS) effective March 26, 2025.

Understanding the Gold Monetisation Scheme

Launch: Introduced in November 2015, this scheme replaced the earlier Gold Deposit Scheme (GDS) and Gold Metal Loan (GML) Scheme with enhanced features.

Purpose:

• Enables individuals, institutions, and government entities to deposit their idle gold with banks and earn interest instead of keeping it in lockers.
• Depositors can opt for redemption in cash, gold bars, or coins upon maturity; however, withdrawal in the original form (jewellery, bars, or coins) is not permitted.

Objectives of the Scheme

• To utilize the large reserves of idle gold held by households and institutions.
• To integrate gold into the formal financial system, curbing reliance on gold imports and reducing the Current Account Deficit (CAD).

Categories of Gold Deposits under GMS

Deposit Type	Tenure	Purpose & Redemption
Short-Term Gold Deposit (STGD)	1-3 years	Banks use these deposits for domestic requirements and lending. Can be redeemed in gold or cash.
Medium-Term Gold Deposit (MTGD)	5-7 years	Managed by the government and RBI as part of gold reserves. Redeemable only in cash.
Long-Term Gold Deposit (LTGD)	7-12 years	Used for monetary policy and reserve management. Redemption available only in cash.

Other Gold-Related Initiatives

Sovereign Gold Bond (SGB) Scheme

• Recently phased out alongside medium- and long-term GMS deposits.
• These bonds were available in denominations of 5g, 10g, 50g, and 100g.
• Aimed at minimizing the demand for physical gold by offering an alternative investment option.

Indian Gold Coin Initiative

• Launched in 2015 alongside the GMS and SGB schemes.
• Introduced India’s first-ever national gold coin, featuring the Ashoka Chakra emblem.