Context: The Ministry of Finance has announced to discontinue Medium- and Long-term deposits under the Gold Monetisation Scheme from March 26, 2025. The banks may continue (at their discretion) Short-Term Gold Deposits (1-3 years) under the scheme.
Relevance of the Topic: Prelims: Key facts about Gold Monetisation Scheme.
Gold Monetisation Scheme:
- Launched in: November 2015
- Initiative of: Ministry of Finance
- GMS facilitated the deposition of idle gold held by households, trusts and various institutions in India.
- Aim:
- To make idle gold productive and let consumers to either sell their gold or store it with banks.
- To reduce the country’s gold imports and thus, reduce the current account deficit.
GMS consisted of three components:
- Short-term bank deposit (1-3 years)
- Medium-term government deposit (5-7 years)
- Long-term government deposit (12-15 years)
- The minimum deposit allowed was 10 gm of raw gold (bars, coins, jewellery excluding stones and other metals). There was no maximum limit for deposit under the scheme.
Gold Monetisation Interest Rate
- For Short-term bank deposit: Interest rate payable is decided by the banks on the basis of the prevailing international lease rates, other costs, market conditions, etc., and is borne by the banks.
- For Medium- and Long-term deposits: Interest rate is decided by the government, in consultation with the RBI and borne by the Central government. Interest rate was fixed at 2.25% per annum for medium-term bonds and at 2.5% for the long-term bonds.
Present status of gold schemes in India:
- Gold Monetisation Scheme is the second gold scheme to face closure by the government in recent months amid a sharp surge in gold prices. The Centre had earlier discontinued fresh issuance of sovereign gold bonds.
- Till November 2024, approximately 31,164 kg of gold had been mobilised under GMS, as per official data.
Also Read: Sovereign Gold Bond Scheme