- GS 3: Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment.
- RBI has announced the next tranche of the Sovereign Gold Bond Scheme or the Sovereign Gold Bond Scheme 2021-22 Series VI, which will be open for subscription for five days from August 30 to September 3, 2021.
- The Sovereign Gold Bond Scheme 2021-2022 price has been fixed at ₹4,732 per gram of gold.
- Sovereign Gold Bond (SGB) Scheme was launched by Ministry of Finance in 2015, under Gold Monetisation Scheme. ( Read about Asset Monetization Pipeline from here).
- They are substitutes for holding physical gold. Investors have to pay the issue price in cash and the bonds will be redeemed in cash on maturity.
- The Bond is issued by Reserve Bank on behalf of Government of India.
Objective of SGB scheme
- It was aimed at reducing our over dependence on gold imports.
- Also, it aimed at changing the habits of Indians from saving in physical form of gold to a paper form.
- People residing in India as defined under Foreign Exchange Management Act, 1999 are eligible to invest in SGB.
- Eligible investors include individuals, HUFs, trusts, universities and charitable institutions.
- Also, every application must be accompanied by the PAN Number (Permanent Account Number) issued by the Income Tax Department to the investor(s).
- The Bonds are issued in denominations of one gram of gold and in multiples thereof.
- Minimum investment in the Bond shall be one gram with a maximum limit of subscription of 4 kg for individuals, 4 kg for Hindu Undivided Family (HUF) and 20 kg for trusts and similar entities notified by the government from time to time per fiscal year.
- In case of joint holding, however, the investment limit of 4 kg will be applied to the first applicant only.
- The tenor of the bond is 8 years; however, early encashment/redemption of the bond is allowed after fifth year from the date of issue on coupon payment dates.
Benefits under the scheme
- The quantity of gold for which the investor pays is protected, since he receives the ongoing market price at the time of redemption/ premature redemption.
- The Sovereign Gold Bond returns is of 2.50% per annum, payable half-yearly.
- The SGB is free from Capitals Gains Tax on redemption.
- The Bond can be used as collateral for loans.
- SGB is tradable on exchanges.
- SGB is free from issues like making charges and purity as is the case with gold in jewellery form.
What is a Sovereign Gold Bond Calculator?
- It is an online tool to help an investor to find out the returns earned from investing in SGB Schemes.