• The government has decided to discontinue the Gold Monetisation Scheme (GMS) starting March 25 in view of the evolving market conditions.

• However, the banks may continue their short term gold deposit schemes (1-3 years).

• The finance ministry clarified that while no new medium or long-term deposits will be accepted after the cutoff date, existing deposits under these categories will remain valid until maturity as per existing guidelines.

• Till November 2024, approximately 31,164 kilograms of gold have been mobilised under GMS.

Gold Monetisation Scheme

• The Gold Monetisation Scheme (GMS) was launched on November 5, 2015. 

• The objective of GMS is to mobilise the idle gold held by households and institutions in the country and put this gold to productive use, by making domestically owned available gold for the gems and jewellery sector, and over time to reduce the country’s dependence on the import of gold.

The GMS is comprised of three components:

i) Short Term Bank Deposit (1-3 years)

ii) Medium Term Government Deposit (5-7 years)

iii) Long-Term Government Deposit (12-15 years).

• Of the total 31,164 kgs of gold till November 2024, Short term Gold Deposit accounted for 7,509 kg, Medium Term Gold Deposit (9,728 kg), and Long Term Gold Deposit (13,926 kg).

• There were about 5,693 depositors who participated in GMS.

• The Short-Term Bank Deposits (STBD) offered by the banks under GMS shall continue at the discretion of the individual banks based on the commercial viability as assessed by them. 

• The government’s move to streamline the scheme suggests that the medium and long-term deposit options failed to gain significant traction among investors.

• The partial continuation of the GMS through short-term deposits maintains some avenue for investors to monetise their gold holdings while the government phases out less popular options.

• Gold has traditionally served as a safe-haven asset during periods of economic uncertainty, and its strong performance this year reflects ongoing global market volatility.

(The author is a trainer for Civil Services aspirants.)