Why is it in the news ?

The Government of India, in consultation with the Reserve Bank of India, has decided to issue Sovereign Gold Bonds.

  1. The Bonds will be sold through Scheduled Commercial banks (except Small Finance Banks and Payment Banks), Stock Holding Corporation of India Limited (SHCIL), designated post offices, and recognised stock exchanges viz., NSE, BSE.

What are the objectives of the Gold Bond Scheme ?

  1. The sovereign gold bond was introduced by the Government in 2015.
  2. Government introduced these bonds to help reduce India’s over dependence on gold imports.
  3. The move was also aimed at changing the habits of Indians from saving in physical form of gold to a paper form with Sovereign backing.

What are the details of the scheme ?

  1. Issuance : Issued by Reserve Bank India on behalf of the Government of India.
  2. Eligibility: The Bonds will be restricted for sale to resident individuals, HUFs, Trusts, Universities and Charitable Institutions.
  3. Denomination:The Bonds will be denominated in multiples of gram(s) of gold with a basic unit of 1 gram.
  4. Tenor: The tenor of the Bond will be for a period of 8 years with exit option after 5th year to be exercised on the interest payment dates.
  5. Minimum size: Minimum permissible investment will be 1 gram of gold.
  6. Maximum limit: The maximum limit of subscribed shall be 4 KG for individuals, 4 Kg for HUF and 20 Kg for trusts and similar entities per fiscal (April-March) notified by the Governmentfrom time to time.
  7. Interest rate: The investors will be compensated at a fixed rate of 2.50 percent per annum payable semi-annually on the nominal value.