The Union Cabinet, led by Prime Minister Narendra Modi, announced the Sovereign Gold Bond Scheme in the Union Budget 2015-16. It was created with the goal of reducing the demand for physical gold and investing a portion of the physical gold bars and coins acquired each year into financial savings in the form of gold bonds.
The Most Up-to-Date Information on the Sovereign Gold Bond Scheme-
Sovereign Gold Bond Scheme
From October 12th, 2020, investors can participate in the seventh tranche of the gold bond programme, in which the Reserve Bank of India (RBI) issues bonds tied to the market price of gold on behalf of the government.
- This series of government-run gold bonds – the Sovereign Gold Bond 2020-21 scheme – comes at a time when the rapid spread of the deadly coronavirus (Covid-19) has disturbed the financial markets around the globe, but increased the appeal of the yellow metal (gold) as a safe-haven.
Sovereign Gold Bond Scheme (UPSC Notes):-Download PDF Here
Some of the highlights of the Sovereign Gold Bond Scheme have been discussed in the table given below:
| Sovereign Gold Bond Scheme | |
| Year of launching | November 2015 |
| Launched by | PM Narendra Modi |
| Government Ministry | Ministry of Finance |
| Tenure of Sovereign Gold Bond Scheme | 8 years |
What is Gold Bond?
The Government of India, in collaboration with the Reserve Bank of India, has launched a Gold Bond programme to lower demand for real gold, since the country's economy and investment are being harmed by rising gold imports. Every Indian family saves a significant amount of actual gold in the form of gold bars and coins. Thus, the Sovereign Gold Bond Scheme intends to convert actual gold into financial savings via gold bonds. These gold bonds have an 8-year term, however they can be cancelled early after 5 years if interest payments are missed.
The Sovereign Gold Bond Scheme was established in 2015 as part of the Gold Monetisation Scheme. The Gold Monetisation Scheme was created to replace the Gold Deposit Scheme (GDS), which had been in effect since 1999. The programme allows gold depositors to receive 2.25 percent interest per year on short-term deposits of one to three years.
Who can apply for Sovereign Gold Bond Scheme?
The Sovereign Gold Bond Scheme can be availed by the individuals falling under the following categories:
- To be eligible for the Gold Bond Scheme, an individual must be an Indian resident, according to the Foreign Exchange Management Act of 1999.
- The Sovereign Gold Bond plan is open to everyone with an Indian residence, including individuals, associations, trusts, and HUFs. They can also invest in these gold bonds together if they meet the scheme's qualifying requirements.
- Minors can also take advantage of the benefits of this plan if their parents purchase the bond on their behalf.
Benefits of Sovereign Gold Bond Scheme
- The Sovereign Gold Bond Scheme allows for a variety of gold denominations when acquiring gold. These gold bonds come in a variety of weight denominations, starting at 1 gramme.
- Gold bonds can be purchased in either paper or demat form, depending on the investor's preference.
- The system also allows for flexible investment, allowing participants to pick the amount they want to contribute.
- The gold bond pays 2.50 percent interest per year, which can be paid semi-annually on the nominal value.
- The Sovereign Gold Bond Scheme has an 8-year term, however it can be revoked early after 5 years if interest payments are missed.
- The gold bonds that the investors have purchased can be gifted or transferred to anyone who are eligible for the programme. They can also trade these bonds on stock markets, subject to Reserve Bank of India regulations.
- Gold bonds can be acquired using a variety of payment methods, including checks, cash, DDs, and electronic transfer.
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