SOVEREIGN GOLD BONDS SCHEME (Syllabus: GS Paper 2 – Government Scheme)

News-CRUX-10     19th September 2023        
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Context: Recently, India's central bank conducted the most recent issuance of the Sovereign Gold Bonds (SGB) scheme, through which the government offers bonds tied to the price of gold to investors.

Sovereign Gold Bonds (SGB) Scheme

  • Introduced: In November 2015
  • Issued by: Reserve Bank of India on behalf of the Government of India.
  • Aim: To reduce the demand for physical gold and shift a part of the gold imported every year for investment purposes, into financial savings through Gold Bonds.
  • Eligibility: SGBs will be restricted for sale to resident individuals, HUFs (Hindu Undivided Family), Trusts, Universities and Charitable Institutions.
  • Tenor: The tenor of the SGB will be for a period of eight years with an option of premature redemption after 5th year.
  • Minimum size: The minimum permissible investment will be One gram of gold.
  • Maximum limit: The maximum limit of subscription shall be 4 Kg for individuals, 4 Kg for HUF, and 20 Kg for trusts and similar entities per fiscal year (April-March) notified by the Government from time to time.
  • Joint holder: In case of joint holding, the investment limit of 4 Kg will be applied to the first applicant only.

Gold Monetization Scheme (GMS): It was launched in 2015 by replacing Gold Deposit Scheme (GDS).

  • Objective: To mobilize gold held by households and institutions of the country and facilitate its use for productive purposes, and in the long run, to reduce country’s reliance on the import of gold.
  • It comprises of the previous 'Gold Deposit Scheme’ and the 'Gold Metal Loan’ scheme, revamped and linked together in GMS.

Revamped Gold Deposit Scheme (R-GDS): It is a fixed deposit in the gold. The customers can deposit their idle gold under it which will provide them safety, interest earnings, etc.