India has discontinued parts of a scheme that encouraged households and institutions to deposit idle gold in exchange for interest payments.
Introduced in 2015, the gold monetisation policy covered gold reserves for one to three years, five to seven years, and twelve to fifteen years.
Citing changing market circumstances and the scheme’s performance, the finance ministry said late Tuesday that the 5-to-7 and 12-to-15 year deposits had been withdrawn.
According to the ministry, banks may still provide short-term gold deposits if they are commercially viable.
The action is expected to limit risks associated with gold prices and lessen the government’s future liabilities. The government covered the interest on medium- and long-term deposits, while banks covered the interest on short-term deposits.
Rising geopolitical tensions and uncertainty surrounding U.S. tariff policy have caused gold prices, which are considered a hedge against economic and geopolitical concerns, to increase by more than 15% this year.
According to India’s finance minister, the current gold reserves will last till they mature. To reflect the modifications, the Reserve Bank of India revised its master instructions on the program.
