Centre discontinues parts of gold deposit scheme amid rising prices

Banks can continue to offer short-term gold deposits based on commercial viability, the ministry said.

The Central government has partly shelved a gold monetisation scheme that allowed households and institutions to deposit their idle yellow metal in exchange for interest payments, a report by Reuters said on March 26.

The scheme, which was announced in 2015, had gold deposit plans for 1-to-3 years, 5-to-7 years and 12-to-15 years.

The finance ministry, late on March 25, said that it has discontinued the 5-to-7 and 12-to-15 year deposits plans, due to "evolving market conditions and performance of the scheme".

Banks can continue to offer short-term gold deposits based on commercial viability, the ministry said.

The move is likely to reduce the government's future obligations and minimise risks related to gold prices. While banks paid the interest on the short-term deposits, the government paid it for the medium- and long-term ones.

Prices of gold, which is seen as a hedge against geopolitical and economic uncertainties, have risen more than 15% this year, driven by escalating geopolitical tensions and uncertainties over U.S. tariff policy.

The existing gold deposits will continue until their maturity, India's finance ministry said.

The Reserve Bank of India has amended its master directions on the scheme to account for the changes.