Sovereign Gold Bond Scheme

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Sovereign Gold Bond Scheme

Sovereign Gold Bond Scheme

Recently, Reserve Bank of India (RBI) has announced the sixth series of Sovereign Gold Bond Scheme 2021-22. Under this scheme, subscription of gold bonds can be taken from 30 August to 3 September 2021.

About Sovereign Gold Bond Scheme:

  • The Sovereign Gold Bond Scheme was launched by the Government of India in the year 2015. The government introduced these bonds to help reduce India’s over-reliance on gold imports.
  • The objective of the scheme was to change the habit of Indians to ‘deposit gold in physical form’ of their savings into ‘documents of sovereign security’.

Key Facts:

  • The sale of Sovereign Gold Bonds for this scheme will be limited to ‘Resident Indian Individuals, Hindu Undivided Families (HUFs), Trust 2, Universities, Charitable Institutions etc.
  • Sovereign Gold Bonds will be denominated in multiples of ‘gram’ gold with a basic unit of one gram. These bonds will have a tenor of eight years and will have an exit option after 5 years, which can be exercised on the interest payment dates.

Minimum and Maximum Limit:

  • The bond is in denominations of 1 gram of gold and in multiples thereof. The minimum investment limit is 1 gram and the maximum limit is four kilograms per year (April-March) for each individual or Hindu undivided family and 20 kilograms for trusts and similar entities notified by the Government of India.
  • However, if the bonds are purchased jointly, the maximum limit of four kilograms will be applicable to the first applicant only. The annual limit will include bonds issued by the government in different series earlier and bonds purchased from the secondary market. The investment limit will not include bonds held by banks or financial institutions as security.

Collateral: All these securities can be used as collateral for taking loans from banks, financial institutions and non-banking financial institutions. The loan-to-value ratio will be as prescribed by the Reserve Bank from time to time in the case of normal gold loans.

Source – The Hindu

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