India's Gold Monetisation Scheme Update

In a significant move, the Indian government has decided to discontinue the medium and long-term gold deposit options under its Gold Monetisation Scheme (GMS), effective from March 26, 2025. This decision marks a pivotal shift in the country's approach to mobilizing idle gold from households and institutions.

What Changes?

The finance ministry announced 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. However, short-term gold deposits will continue at the discretion of individual banks, based on commercial viability.

Impact and Rationale

This adjustment is expected to reduce the government's future financial commitments and mitigate risks associated with fluctuating gold prices. The move comes as gold prices have surged more than 15% this year, fueled by global tensions and concerns over US tariff policies.

Assurances for Existing Depositors

The finance ministry has assured that existing gold deposits will remain intact until maturity. The Reserve Bank of India has also amended its master directions on the scheme to reflect these changes, ensuring a smooth transition for all stakeholders involved.