Gold Bond Scheme

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Subject: Economy

Context:

Government announced opening up of Sovereign Gold Bonds 2020-21 (Series III) for the period June 08-12, 2020

Concept:

  • Gold bonds have been introduced to convert the demand for gold as a physical asset into financial savings.
  • Sovereign Gold Bonds or SGBs issued by the RBI on behalf of government are priced in relation to the price of gold and offer a fixed interest rate.
  • At the time of maturity, the bond owner receives the value of the bond in line with the current price of gold.
  • Gold bonds are restricted for sale to resident Indian entities including individuals, HUFs, trusts, universities and charitable institutions.
  • The minimum application size for this investment is equivalent to 1 gram of gold and the maximum limit of subscribed shall be 4 KG for individual, 4 Kg for HUF and 20 Kg for trusts and similar entities per fiscal year (April-March)
  • Bonds can be used as collateral for loans and are tradable on stock exchanges within a fortnight of the issuance on a date as notified by the RBI.