Gold Monetisation Scheme (GMS)

  • 28 Mar 2025

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The Government of India discontinued the Medium-Term and Long-Term Government Deposits (MLTGD) under the Gold Monetisation Scheme (GMS) with effect from March 26, 2025. Earlier, the Sovereign Gold Bond (SGB) scheme was also discontinued.

What is the Gold Monetisation Scheme (GMS)?

  • Launched: 15th September 2015 (improved version of earlier Gold Deposit Scheme and Gold Metal Loan Scheme).
  • Objective:
    • Mobilize idle gold held by households and institutions.
    • Bring privately held gold into the formal economy.
    • Reduce the country's dependence on gold imports.
    • Help lower the Current Account Deficit (CAD).
  • Eligibility: Individuals, institutions, and government entities could deposit their idle gold in banks.
  • Redemption:
    • Gold is not returned in the same form (e.g., jewellery).
    • Maturity proceeds are redeemed in the form of cash, gold bars, or coins (depending on the type of deposit).

Types of Deposits under GMS (Before Discontinuation of MLTGD):

  • Short-Term Bank Deposit (STBD):
    • Tenure: 1–3 years
    • Interest Rate: Variable; decided by banks
    • Redemption: Gold or cash
    • Use: Lending by banks for domestic needs
  • Medium-Term Government Deposit (MTGD):
    • Tenure: 5–7 years
    • Interest Rate: 2.25%; decided by Govt. in consultation with RBI
    • Redemption: Cash only
    • Use: Government and RBI reserves
  • Long-Term Government Deposit (LTGD):
    • Tenure: 12–15 years
    • Interest Rate: 2.5%; decided by Govt. in consultation with RBI
    • Redemption: Cash only
    • Use: Monetary policy operations and reserves

Note: As of 2025, only the Short-Term Bank Deposit remains operational.

Sovereign Gold Bond (SGB) Scheme – Overview:

  • Launched: 2015
  • Objective:
    • Reduce demand for physical gold.
    • Promote investment in financial gold instruments.
    • Channel household savings into productive financial assets.
  • Key Features:
    • Issued in denominations of 5g, 10g, 50g, and 100g.
    • Tenure: 8 years (with exit option after 5 years).
    • Interest Rate: 2.5% per annum (paid semi-annually).
    • Capital gains tax exemption on maturity.
    • Backed by the Government of India.
  • Status: Discontinued as of 2025, alongside MLTGD and LTGD under GMS.

Other Gold-Related Initiative:

  • Indian Gold Coin Scheme (2015):
    • First-ever national gold coin with the Ashoka Chakra emblem.
    • Launched alongside GMS and SGB to promote domestically branded gold and reduce reliance on imported gold bars/coins.