SOVEREIGN GOLD BOND SCHEME :-
The government released the next series of sovereign gold bond by the RBI on behalf of the Government of India. Sovereign Gold Bonds are government securities denominated in physical gold.It was first launched under the gold monetization scheme of 2015 with the objective of attracting tonnes of physical gold in the Indian household into the banking system and reducing demand through imports and in the process reduce India's current account deficit.
Persons resident in India as defined under Foreign Exchange Management Act, 1999 are eligible to invest in SGB. Eligible investors include individuals, HUFs, trusts, universities, charitable institutions, etc. resident Indians can invest in SGBs for a minimum of 1 g and maximum of 500 grams per year.
Features of the Scheme
• SGBs are government securities denominated in grams of gold. The SGB offers a superior alternative to holding gold in physical form.
• The risks and costs of storage are eliminated. SGB is free from issues like making charges and purity in the case of gold in jewellery form.
• These bonds carry sovereign guarantee both on the capital invested and the interest. It carries a fixed interest rate of 2.50% per annum.
• There may be a risk of capital loss if the market price of gold declines. However, the investor does not lose in terms of the units of gold which he has paid for
• Bonds can be used as collateral for loans.
• Capital gain tax arising on redemption of SGB to an individual has been exempted.
• The Sovereign Gold Bonds is available both in demat and paper form.
• Bonds would be allowed to be traded on exchanges to allow early exits for investors who may so desire.The tenor of the bond is for a minimum of 8 years with an option to exit in 5th, 6th and 7th years.
Sources: Press Information Bureau