The Sovereign Gold Bond (SGB) Scheme is a government securities program launched in November 2015 under the Gold Monetisation Scheme, where the RBI issues bonds on behalf of the Government of India as a substitute for physical gold.
Objective
- Reduce gold imports and dependence on foreign gold
- Shift savings from physical gold to paper form
- Mobilize idle gold (estimated 20,000 tonnes with households) into the economy
- Finance government’s fiscal deficit
- They are available for purchase through Scheduled Commercial banks (except Small Finance Banks, Payment Banks and Regional Rural Banks), Stock Holding Corporation of India Limited, Clearing Corporation of India Limited, designated post offices and National Stock Exchange of India Limited and Bombay Stock Exchange Limited, either directly or through agents.
Eligibility To Purchase
- The bonds are available for purchase by resident individuals, Hindu Undivided Families (HUFs), trusts, universities, and charitable institutions.
Feature
- The price of gold bonds is linked to the price of gold of 999 purity (24 carats) as published by the India Bullion and Jewellers Association (IBJA), Mumbai.
- Gold bonds can be bought in multiples of one unit (1 gram), up to specific limits for different investors.
- Gold bonds have a maturity period of eight years, with the option to exit the investment after the first five years.
- The scheme offers a fixed annual interest rate of 2.5%, payable semi-annually.
Source: The Indian Express