Sovereign Gold Bond Scheme
- Launched in November 2015 to rein in physical demand for gold and channel domestic savings for financial investments.
- The Gold Bonds are issued as Government of India Stock under the Government Securities (GS) Act, 2006.
- Eligibility- Resident individuals, Hindu Undivided Families (HUFs), Trusts, Universities, and Charitable institutions.
Sovereign Gold Bond Scheme features - Price is based on gold at 999 purity.
- Varied investments are available for distinct investors.
- The term of maturity shall be eight years with an exit option after five.
- Fixed annual interest rate of 2.5% payable semi-annually.
Other Important points regarding SGB
- A government security that is rated in grams measured by the amount of gold purchased by investors.
- Available by the Reserve Bank of India, on behalf of the Government of India.
- Investable for Individuals, HUFs, Trusts, Universities, and Charitable Institutions.
- Investment limits: Rs.1 gram of gold is the minimum investment to Rs.20 kg in one financial year.
- Tenures: The duration of the bond is considered 8 years with exit options made available in the 5th, 6th, or 7th years.
- Buy SGBs from the nationalized banks, scheduled private and foreign banks, designated post offices, stock holding corporation of India Ltd. (SHCIL), and authorized stock exchanges.
- Other main features: are promise of payment, assured gold price at maturity, interest periods, loan collateral and tradable.
- This is a scheme that is attractive presenting all the features of assured returns and tradability as well as exempting capital gain tax.
Advantages and Disadvantages of Investing in SGB
- SGB is a long-term investment; as opposed to physical gold which can be sold immediately.
- The volumes traded are quite low; so it becomes very difficult to get out before maturity.
Gold Reserves and Imports
- A total of 501.83 million tonnes of gold ore reserves available in the country by 2015.
- For instance: Bihar (44%), followed by Rajasthan (25%), Karnataka (21%), West Bengal (3%), Andhra Pradesh (3%), and Jharkhand (2%).
- Karnataka alone possesses around 80 percent of total gold produced in the country.
India’s Gold Imports
- Second biggest consumer of gold in the world; imports are expected to grow at 30% for the year 2023-24.
- A notable decline in gold imports is witnessed during March 2024.
