The Union Finance Ministry announced on Tuesday that the medium and long-term government deposit (MLTGD) components of the Gold Monetisation Scheme (GMS) will be phased out beginning March 26.

This decision was taken after a careful analysis of the scheme's performance and shifting market conditions, the finance ministry said in a statement.

Launched on September 15, 2015, the GMS sought to lessen the nation's dependency on gold imports while simultaneously enabling individuals and organizations to make profitable use of their substantial gold reserves.

Short-term bank deposits (1-3 years), medium-term government deposits (5-7 years), and long-term government deposits (12-15 years) were the three original components of the scheme.

Deposits under the medium-term and long-term government deposit components will no longer be accepted at designated collection and purity testing centres (CPTC), gold monetisation scheme collection and testing agents (GMCTA), or bank branches beginning March 26.

Existing deposits under these components, however, will be held until redemption in accordance with the current guidelines outlined in the Reserve Bank of India's (RBI) master direction.

"While the MLTGD components are phased out, the short-term bank deposit (STBD) option will remain available. However, its availability will be determined by the individual banks' commercial viability assessments. The RBI is expected to issue detailed guidelines on this in due course," according to the finance ministry statement.

This change in policy is a reflection of the government's continuous attempts to enhance the GMS and modify it to accommodate the evolving financial environment while keeping gold's economic significance front and center.