Short-Term Gold Deposits to Continue; MLTGD Ends from March 26
The Indian government has decided to discontinue the Medium-Term and Long-Term Government Deposit (MLTGD) options under the Gold Monetisation Scheme (GMS), starting March 26, 2025. However, banks will still offer Short-Term Gold Deposits (1-3 years) under the scheme.
Why is the Government Ending MLTGD?
The Ministry of Finance stated that the decision was made after analyzing the performance of the Gold Monetisation Scheme and considering the changing market conditions. As a result, starting March 26, 2025, no new gold deposits will be accepted under the Medium-Term (5-7 years) and Long-Term (12-15 years) deposit categories.
What Happens to Existing Deposits?
If you already have a medium-term or long-term gold deposit, there’s no need to worry. The government has assured that all existing deposits will continue as per the current guidelines, and investors will get their returns upon maturity.
Impact on Gold Investors
This move will primarily impact individuals and institutions who were looking for long-term investment options in gold through the GMS. However, those who prefer short-term deposits (1-3 years) can still benefit from the scheme.
What is the Gold Monetisation Scheme (GMS)?
Launched on September 15, 2015, the Gold Monetisation Scheme aimed to:
Reduce gold imports by mobilizing gold held by individuals and institutions.
Encourage productive use of idle gold in the economy.
Provide interest on deposited gold while ensuring its security.
Since its launch, over 31,164 kg of gold has been deposited under GMS (as of November 2024).
What’s Next for Gold Investors?
If you’re considering gold investments, you may want to explore:
Short-Term Gold Deposits (1-3 years) under GMS.
Sovereign Gold Bonds (SGBs) for long-term returns.
Gold ETFs or digital gold for market-based investments.
India’s Gold Bond Scheme Creates ₹1.2 Trillion Liability for Government
The Indian government’s effort to reduce gold demand has resulted in a huge financial burden. Through 67 rounds of Sovereign Gold Bonds (SGBs), the government sold bonds backed by 147 tons of gold. However, it still needs to repay 132 tons to investors.
At current gold prices, this liability stands at approximately ₹1.2 trillion. The final repayment for these bonds is scheduled to be completed by February 2032.
With this new change, the government is likely aiming to streamline gold investments and make the system more efficient for investors.
