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Informist, Tuesday, Mar. 25, 2025

 

NEW DELHI – The government has decided to terminate the Gold Monetisation Scheme starting Wednesday, owing to evolving market conditions, the finance ministry said in a release on Tuesday. The medium-term and long-term government deposit components of the scheme will be terminated from Wednesday, but "the existing deposits under MLTGD (medium-term and long-term government deposit components) shall continue till redemption as per extant guidelines of GMS issued vide Reserve Bank Master Direction No...," the release said. 

 

Launched in September 2015, the Gold Monetisation Scheme--comprising the previous Gold Deposit Scheme and the Gold Metal Loan scheme--aimed to mobilise gold held by institutions or households and facilitate its use for productive purposes, reducing the country's reliance on the import of gold in the long run. Under this scheme, there are three types of deposits: short-term bank deposits, medium-term, and long-term government deposits.

 

The release also noted that the short-term bank deposits offered by the banks under the Gold Monetisation Scheme will continue at the discretion of the individual banks based on the commercial viability as assessed by them. 

 

The government's move comes at a time when gold prices are hitting news highs every day due to safe-haven demand and are up over 14% since the beginning of the year. Geopolitical uncertainty around the Russia-Ukraine conflict, the war in West Asia, and, more recently, the trade policies of US President Donald Trump have lifted safe-haven demand for gold, as other investment avenues have lost much of their appeal.

 

This also comes a few weeks after Chief Economic Adviser V. Anantha Nageswaran's comment that the government needs to rethink its gold monetisation efforts considering each time it attempted to pay back the owners who deposited gold in currency form. "...but probably people attach different significance to gold and sometimes the government tend to forget that in policy deliberation. That needs to be reflected on," he had said while speaking at the Gold and Gold Markets Conference, organised by the Indian Institute of Management, Ahmedabad, and India Gold Policy Centre on Mar. 3.  End

 

Reported by Priyasmita Dutta

Edited by Akul Nishant Akhoury

 

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