Kolkata: From March 26, 2025 the government has discontinued the medium-term and long-term deposits of the Gold Monetisation Scheme, which was introduced less than 10 years ago with the purpose of bringing down the import bill of gold. The chief reason for terminating these two deposits was the continuous rise of the prices of gold. However, the short-term deposits will continue to be offered though these will be at the discretion of the banks.

Significantly, recently, the government also decided to discontinue the Sovereign Gold Bonds — popularly known as SGBs — that were introduce din November 2015 with the same objective of reducing the import of the yellow precious metal in the country. The import bill of gold is second only to the oil import bill in India. Therefore, the Gold Monetisation Scheme was the second scheme to be discontinued by the government in quick succession.

Gold Monetisation Scheme deposits and interest rates

The Gold Monetisation Scheme had three deposit plans — short-term bank deposit that range for one to three years, the medium-term deposits that range between five and seven years and the long-term deposits that ranged from 12 to 15 years. The minimum gold that one could deposit under this scheme was 10 grams and all forms of gold from bars to coins and jewellery would be accepted. There was no limit on the deposit one could make.

After depositing the gold with a bank under this scheme, one could earn interest at rates that were influenced by factors such as international lease rates, market conditions etc. The interest rate for medium-term bonds is 2.25% while that of long-term bonds is 2.5%. However, for the short-term deposits the rate of interest is set by the banks since this interest rate is borne by the banks. The interest liability of the medium and long-term deposits were borne by the government.

Gold held monetisation Scheme

Data shows that till November 2024, the total gold mobilised under the Gold Mobilisation Scheme was 31,164 kg from 5,693 depositors. While the long-term deposits mobilised 13,926 kg, the medium-term mobilized 9,728 kg and the short-term plan got 7,509 kg. Obviously the interest cost was hurting the Centre.

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