Gold Monetisation Scheme 2026: Why It Shrank to One Option, and the Jeweller-Led Revamp Still Pending

Indian households are sitting on an estimated 25,000-30,000 tonnes of gold — more than the reserves of several of the world's largest central banks combined — almost all of it idle in lockers and cupboards rather than earning anything. The government's fix, the Gold Monetisation Scheme, has existed since 2015 specifically to unlock that gold. In a decade, it has mobilised barely 39 tonnes. Two of its three deposit routes quietly shut in 2025, and a jeweller-led redesign meant to fix the scheme's reach has been "expected soon" for over a year without a formal notification.

What GMS Offered, and What Survived 2025

The split matters because of who bore the cost. STBD interest is set and paid by individual banks from their own books, so it survives as long as a bank finds it commercially worthwhile to offer. MTGD and LTGD interest was paid by the central government, with banks acting only as collection agents — and the government discontinued fresh deposits into both from March 26, 2025, citing weak scheme performance and prevailing market conditions. If you already hold an MTGD or LTGD, nothing changes: your deposit runs to its original maturity date unless you withdraw early, which usually costs a penalty.

Why a Decade-Old Scheme Mobilised So Little

• **Melting was mandatory** — depositing jewellery meant sending it to a Collection and Purity Testing Centre to be assayed and melted into standard gold bars first, a step many owners were unwilling to take with pieces carrying sentimental or family value
• **Thin collection infrastructure** — dedicated collection centres and BIS-certified hallmarking centres existed mainly in metro bank branches, leaving most of the country's gold-holding households with no practical way to participate
• **Low awareness** — a decade in, most bank customers still don't know the scheme exists, let alone which of its three deposit types might suit them
• **A structural mismatch with how Indians hold gold** — the scheme was built around jewellery and ornaments, but the conversion process treated all gold the same way regardless of its emotional or resale value to the owner

The Jeweller-Led Revamp — Still a Proposal, Not a Scheme

The India Bullion and Jewellers Association has proposed letting local jewellers act as the first point of collection: a customer brings jewellery to a jeweller, who conducts an initial purity check and forwards the gold to authorised refiners and banks, earning an incentive of roughly 0.75-1% of the gold's value for doing so. The logic is straightforward — jewellers already run purity checks routinely for exchange and resale, and households trust a familiar local jeweller in a way they've never extended to a bank branch for this specific purpose. This was widely expected to be formalised around August 2026, ahead of the festive season, when gold-buying and gold-exchanging activity peaks nationally. As of October 2026, it remains under discussion between the government, RBI, and industry bodies, with no formal notification issued — a pattern of slipped timelines not unlike other long-pending financial-sector reforms.

If You Don't Want to Melt Jewellery, the Alternatives Are Already Live

GMS was always a narrow fit — it only ever made sense for gold you were willing to convert into standard bars. For gold exposure without melting anything, Gold ETFs and gold mutual funds track the metal's price without requiring you to hand over physical jewellery at all, and existing Sovereign Gold Bonds can still be held to maturity or sold in the secondary market even though fresh SGB issuance has also stopped. Our comparison of Gold ETFs, SGBs, and physical gold covers how each is taxed and which best replaces GMS's original purpose for someone who isn't an existing depositor.

What to Actually Do Right Now

1. If you hold an existing MTGD or LTGD, let it run to maturity — premature withdrawal typically carries a penalty, and you can't re-enter a new deposit at the same tier once it closes
2. If you want interest on physical gold today, only STBD at select banks remains open, and it still requires sending gold for purity testing and melting
3. If melting jewellery isn't something you're willing to do, Gold ETFs, gold mutual funds, or digital gold are the practical no-melt alternatives, with broadly similar capital-gains tax treatment on long-term holdings
4. Don't assume the jeweller-led revamp is live — as of October 2026 it's still a proposal under government discussion, not a notified scheme you can actually use