Gold Monetisation Scheme in 2026: What Is Actually Left

Most of the Gold Monetisation Scheme no longer exists. On 26 March 2025 the government discontinued its Medium Term and Long Term Government Deposit components. What remains is the Short Term Bank Deposit under GMS, and even that is offered only if your bank chooses to offer it.

That matters because the scheme is still widely explained in its 2015 form, with five to seven year and twelve to fifteen year options presented as though you could walk into a branch and open one. You cannot.

What the RBI notification says

The instrument is RBI notification RBI/2024-25/132, dated 25 March 2025 and addressed to all scheduled commercial banks other than regional rural banks. Its language is short and worth reading rather than paraphrasing.

The government “has decided to discontinue the Medium Term and Long Term Government Deposit (MLTGD) components of GMS”, with effect from 26 March 2025.

Existing deposits are untouched: “The MLTGD mobilized till March 25, 2025 shall continue till redemption as per the extant guidelines.” Banks must “inform the depositors about redemption through letter and other means … at least 120 days prior to redemption date”, and the depositor chooses at that point whether to take gold or rupees.

And the surviving component is explicitly optional for the bank: “The designated banks, at their discretion, may offer Short Term Bank Deposits (STBD) under GMS.”

The government broadcaster reported the same day that the decision followed “the examination of the performance of the Gold Monetisation Scheme and evolving market conditions”. No official figure for how much gold the scheme actually mobilised was given in either source, so we are not quoting one.

What a short term gold deposit actually gives you

Taking one bank’s published terms as the worked example, State Bank of India’s Revamped Gold Deposit Scheme currently lists only short term deposits: 0.50% a year for one year, 0.55% above one year to two, and 0.60% above two years to three. The minimum is “10 grams of raw Gold (excluding stones and other metals)” with no maximum, and it accepts “Gold bars, Coins, Jewellery excluding stones and other metals”.

Rates differ by bank and this is the single page we read, so treat the numbers as an example rather than a market rate.

Three mechanics matter more than the rate.

The principal is in gold, the interest is not. SBI’s terms put it precisely: “The principal shall be denominated in gold. However, the interest shall be calculated in Indian Rupees with reference to the value of gold at the time of deposit.” So your principal follows the metal, and your interest is a rupee amount pinned to the gold price on the day you walked in. If gold doubles over three years, the interest does not.

Your jewellery is melted. The scheme takes raw gold, and a piece of jewellery is assayed and melted to establish what it actually contains. Anything you paid in making charges is gone at that moment, and so is the piece. That is the correct trade for a bangle sitting unworn in a locker and the wrong one for something you would miss.

The redemption choice is made at the start and cannot be changed. You choose repayment in gold or in the rupee equivalent when you deposit, and SBI’s terms say that choice “shall be irrevocable”. Premature withdrawal is possible after a one year lock-in with penal interest.

Who this is actually for

The honest answer is narrow: someone with at least ten grams of gold they are certain they will never wear, who wants it to earn something rather than nothing while remaining gold, and who is comfortable with it being melted and with a three year outside horizon.

For that person it is a genuinely reasonable product. Half a percent is not much, but idle metal in a locker earns zero and costs you locker rent, so the comparison is not against a fixed deposit, it is against nothing.

For everyone else the scheme answers a question they were not asking. If what you want is money now without giving up the gold, that is a gold loan, a different product entirely. If what you want is to convert the gold into cash, that is a sale, and our piece on the most profitable way to sell gold covers the routes. If what you want is to own gold without a locker in the first place, the deposit schemes were never the answer and our rundown of the ways Indians hold gold sets out the alternatives, including where sovereign gold bonds sit against digital gold.

One practical note if you are considering a deposit: a redemption in rupees is a disposal, and gold is taxed accordingly. Our piece on capital gains on gold has the current position.

Tax rules change. Confirm with a qualified advisor before acting.

Questions people ask

Is the Gold Monetisation Scheme still available in 2026? Partly. The medium and long term government deposits were discontinued on 26 March 2025. The Short Term Bank Deposit under GMS continues, but the RBI notification makes it discretionary, so whether you can open one depends on your bank.

What happens to my existing medium or long term deposit? Nothing changes. The notification says deposits mobilised up to 25 March 2025 continue to redemption under the existing guidelines, and your bank must contact you at least 120 days before the redemption date so you can choose gold or rupees.

Is the gold monetization scheme the same thing? Yes, that is the same scheme with the other spelling. The official name uses the Indian spelling, monetisation.

Can I deposit jewellery? Yes, subject to the bank’s terms, but it is treated as raw gold. Stones and other metals are excluded, and the piece is assayed and melted, so it does not come back as jewellery.

How much interest does it pay? On the one bank page we read, between 0.50% and 0.60% a year depending on tenure. Rates differ by bank, and the interest is calculated in rupees against the gold value on your deposit date rather than tracking the gold price afterwards.

Why was it discontinued? The government’s stated reason is “the examination of the performance of the Gold Monetisation Scheme and evolving market conditions”. No further explanation was published in the notification.

The short version

The Gold Monetisation Scheme in 2026 is one product, not three. The Short Term Bank Deposit under GMS survives at each bank’s discretion, pays well under one percent, keeps your principal in gold while fixing the interest in rupees, and melts whatever you hand over.

If you are reading a page that offers you a twelve year deposit, you are reading a page written before 26 March 2025.