The government has officially closed the Gold Monetization Scheme (GMS), effective March 26.
The Finance Ministry issued a statement regarding this decision. This marks the second gold-related scheme to be discontinued by the government.
Earlier, the Sovereign Gold Bond (SGB) Scheme had also been halted, although no formal announcement was made.
Since February 2024, the government has not issued new installments of SGB, suggesting that it does not intend to continue the scheme.
What is the Gold Monetization Scheme?
The Gold Monetization Scheme (GMS) was launched on September 15, 2015, to encourage people to deposit their idle gold.
The goal was to reduce gold imports, as India consumes about 800 tonnes of gold annually but produces only one tonne.
By depositing gold, individuals could contribute to reducing the country’s dependence on imported gold.
Benefits of Depositing Gold in GMS
Under this scheme, individuals depositing gold received gold bonds in denominations of 5g, 10g, 50g, and 100g.
These bonds matured in 5-7 years, and the interest was calculated based on the market price of gold at the time of deposit.
This initiative aimed to provide interest earnings to depositors while helping the government manage gold demand.
Can You Still Deposit Gold in GMS?
Yes, but with limitations. The scheme had three deposit options:
Short-Term Bank Deposit (STBD) – 1-3 years (Still available)
Medium-Term Government Deposit – 5-7 years (Closed)
Long-Term Government Deposit – 12-15 years (Closed)
While medium-term and long-term options are discontinued, short-term deposits remain open, but banks will decide whether to continue offering them.
What Happens to Existing Gold Deposits?
If you have already deposited gold under GMS, there is no need to worry:
1) Your money will be returned on maturity.
2) If you wish to redeem gold before maturity, you can, but with a penalty.
3) Those who chose physical gold deposits will receive their gold back at the end of the term.
In short, the scheme’s closure does not affect existing depositors, and they will get their returns as per the original terms.
