Sovereign Gold Bond Scheme

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

Facts:

• The Sovereign Gold Bond Scheme was introduced in 2015.They are government securities denominated in grams of gold.
• Aim: To reduce the demand for physical gold and shift a part of the domestic savings used for the purchase of gold into financial savings.
• Issuance: Reserve Bank India on behalf of the Government of India.
• Eligibility: Restricted for sale to resident entities including individuals, Hindu Undivided Families (HUFs), Trusts, Universities and Charitable Institutions.
• Denomination: The bonds will be denominated in multiple grams of gold.The minimum permissible investment will be 1 gram of gold and maximum shall be 4 KG for the individual,HUF and 20 Kg for trusts.
• Duration: The time period of the Bond will be for a period of 8 years with exit option after 5th year.
• Sales Channel: Bonds will be sold through banks, Stock Holding Corporation, designated post offices and National Stock Exchange of India Limited and Bombay Stock Exchange.
• Collateral: Bonds can be used as collateral for loans.
• Tradability: Bonds will be tradable on stock exchanges after it has been notified by the RBI.