Rapid Fire
Gold Monetisation Scheme
- 27 Mar 2025
- 2 min read
Based on the performance of the Gold Monetisation Scheme (GMS), the Union Government has decided to discontinue the Medium-Term and Long-Term Government Deposit (MLTGD) components of the scheme. However, banks may continue to offer Short-Term Bank Deposits (STBD).
- Earlier, the government had also discontinued the Sovereign Gold Bonds (SGB).
- GMS: The GMS, which comprises the earlier 'Gold Deposit Scheme' and 'Gold Metal Loan' scheme, was announced on 15th September 2015.
- It aims to decrease the country's long-term dependence on gold imports and mobilize gold held by households and institutions in the formal economy.
- Components of GMS:
- Short Term Bank Deposit (1-3 years) (variable interest rate)
- Medium Term Government Deposit (5-7 years) (2.25% interest rate)
- Long-Term Government Deposit (12 - 15 years) (2.5% interest rate)
- Interest Rate Under GMS: For MLTGD, the rate of interest is decided by the Union Government in consultation with the RBI, whereas for short term deposits, the rate of interest is decided by the banks.
- SGB: The SGB scheme was introduced in 2015 to decrease the demand for physical gold and redirect a portion of domestic savings, which would otherwise be used to buy gold, into financial savings.
- The scheme provides an interest rate of 2.5% on the initial investment, with interest credited semi-annually to the investor's bank account.
Read More: Gold Monetisation Scheme, Sovereign Gold Bond Scheme, Factors Shaping Global Gold Prices |