India withdraws parts of gold monetization program as market dynamics change

The Indian government has discontinued key elements of its gold monetization scheme, which was designed to mobilize idle household and institutional gold reserves through interest-bearing deposits.

India's 2015 gold monetization scheme originally accepted deposits across three tenors: short-term (1–3 years), medium-term (5–7 years), and long-term (12–15 years). However, the Finance Ministry announced on Tuesday the discontinuation of medium and long-term deposit options, attributing the change to evolving market conditions and the program's operational effectiveness.

Banks will continue offering short-term gold deposits (1–3 years), provided these instruments maintain their commercial viability under the revised framework.

This policy change will decrease future government liabilities while reducing exposure to gold price volatility. Under the previous structure, banks covered interest payments for short-term deposits, while medium- and long-term deposit obligations were borne by the national budget.

Gold prices, historically regarded as a safe-haven asset during economic uncertainty, have surged over 15% year-to-date amid ongoing market volatility.

The Ministry confirmed all existing gold deposits will remain valid until maturity, according to a Reuters report.