Gold Monetization Scheme No Longer Active – Here’s What You Can Do Instead

Gold Monetization Scheme: The Gold Monetization Scheme (GMS) was once a popular way for Indian households and temples to earn interest on their idle gold. But recently, the Indian government has discontinued the medium-term (5–7 years) and long-term (12–15 years) GMS deposit options, leaving only short-term deposits (1–3 years) available, and that too at the discretion of individual banks. This decision has left many investors wondering: what now?

If you’ve been relying on the GMS to make your gold work for you, don’t worry. There are still several smart, secure, and potentially lucrative ways to invest in gold today. Whether you’re a seasoned investor or just getting started, this guide will walk you through the best alternatives available.

Gold Monetization Scheme

The end of the Gold Monetization Scheme’s medium and long-term deposit options might feel like a setback, but it’s really a chance to explore modern, diversified, and often more rewarding gold investment opportunities. From the safety of SGBs to the flexibility of ETFs and digital gold, there’s something for every kind of investor.

Take time to evaluate your options, consult a financial advisor if needed, and ensure your hard-earned gold continues to sparkle financially.

Understanding the End of Medium & Long-Term GMS

The Gold Monetization Scheme was introduced in 2015 to reduce gold imports by encouraging citizens to deposit their idle gold with banks. In return, depositors received interest along with the safety of a government-backed scheme. But with low participation and high maintenance costs, the medium- and long-term options were recently withdrawn in early 2025.

Why It Matters

Millions of Indian families hold gold as jewelry, coins, or bars, often passed down through generations. With GMS partially shut, people are looking for new ways to earn returns on their gold without letting it sit idle.

Best Alternatives to the Gold Monetization Scheme

1. Sovereign Gold Bonds (SGBs)

SGBs are issued by the Reserve Bank of India (RBI) on behalf of the Government of India. They are paper-based investments, denominated in grams of gold, making them one of the safest ways to invest.

Why Choose SGBs:

1. Earn Fixed Interest: You get 2.5% per annum (payable semi-annually) on the initial investment.
2. Tax Benefits: No capital gains tax if held till maturity (8 years).
3. No Storage Hassles: Your gold is stored electronically.
4. Safe & Government-Backed.

Note: As of February 2025, fresh SGB issuances are paused. But existing bonds are still tradable in secondary markets like NSE/BSE. (Source)

2. Gold Exchange-Traded Funds (ETFs)

Gold ETFs are mutual fund units backed by physical gold. They are traded on stock exchanges like shares.

Key Benefits:

1. High Liquidity: You can buy/sell anytime during market hours.
2. Transparent Pricing: Reflects real-time gold prices.
3. Low Costs: No storage or insurance fees.
4. Regulated by SEBI.

Perfect for those who want flexibility and security without holding physical gold.

3. Gold Mutual Funds

Gold mutual funds invest in Gold ETFs or physical gold, but don’t require a Demat account. Ideal for beginners.

What Makes Them Attractive:

1. Professional Management: Fund managers handle everything.
2. SIP Options: Start investing with as little as ₹500 per month.
3. Accessible: No need for trading knowledge.

If you’re new to gold investing, this is an easy way to get started.

4. Digital Gold

Digital gold lets you buy fractions of gold online through platforms like PhonePe, Paytm, or Amazon.

Advantages:

1. Start Small: Buy gold worth even ₹1.
2. Real-Time Purchase: Linked to live gold prices.
3. Storage-Free: Gold is stored in insured vaults.
4. Convert to Physical Gold: Many platforms offer doorstep delivery.

However, digital gold isn’t yet regulated by SEBI or RBI, so choose providers carefully.

5. Physical Gold (Coins, Bars, Jewelry)

Still a go-to for many, physical gold is tangible and easy to understand.

Pros:

1. Widely Accepted: Use it, gift it, pledge it.
2. Variety of Forms: Coins, bars, or jewelry.

Cons:

1. Storage Risks: Theft, damage, or loss.
2. Additional Costs: Making charges, GST, and purity verification.

Use it as a legacy investment or emergency reserve, but don’t rely solely on it for returns.

Gold Investment Options for NRIs

If you’re a Non-Resident Indian (NRI), you can still participate in India’s gold market with a few limitations:

What You Can Do:

1. Gold ETFs and Mutual Funds (via NRE/NRO accounts)
2. Digital Gold via Indian fintech platforms

What You Can’t Do:

1. No new investments in SGBs (existing holdings before becoming NRI can be kept until maturity)

For more info, check ICICI Bank’s NRI Investment Guide.

Gold Monetization Scheme: How to Choose the Right Option for You

Before investing, assess your financial goals, risk appetite, and investment horizon.

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FAQs on Gold Monetization Scheme

Q1. Is the Gold Monetization Scheme completely discontinued?

No. Only the medium- and long-term deposit options have been discontinued. Short-term deposits are still available at the discretion of individual banks.

Q2. Can I still earn returns on my idle gold?

Yes. You can invest in options like SGBs, Gold ETFs, Mutual Funds, or Digital Gold depending on your goals.

Q3. Are Sovereign Gold Bonds safe?

Absolutely. They are backed by the Government of India and issued by the RBI.

Q4. Is digital gold safe?

Digital gold is stored in insured vaults, but it’s not regulated by SEBI or RBI. Choose reputed platforms for safety.

Q5. Can NRIs invest in Sovereign Gold Bonds?

No, NRIs are not eligible for new SGBs. But they can hold existing ones purchased before becoming NRIs.