Updated By: LatestGKGS Desk
RBI aims to reduce demand of Gold following historical fall of INR vs USD
Reserve Bank of India (RBI) move to stock Gold under the Sovereign Gold Bond Scheme
The government of India recently launched a Sovereign Gold Scheme to provide an alternate option when it comes to owning gold. Under the Sovereign Gold Bond Scheme, the Reserve Bank of India will issue the bonds on behalf of the Government of India.
This scheme aims to reduce the demand for physical gold, thereby keeping a tab on gold imports and utilizing resources effectively. a Sovereign Gold Bond is a government issued security which represents a certain weight of gold. Owning a gold bond of a certain weight is akin to owning that quantity of gold, albeit in a different form.
The bonds will be sold at post offices and banks and issued in the denomination of gram. They will issue these bonds on payment of money. Investors have to pay the bond price in cash. From one person, the Sovereign Gold Bond Scheme would accept a minimum investment of 2 gm gold and a maximum investment of 500 gm in a single fiscal year.
The bonds will pay a yearly interest of 2.75% to investors. Interest would be paid semi-annually based on the initial value of investments.
This scheme is open only to Indian residents, with the Foreign Exchange Management Act of 1999 formulating the eligibility criteria. These bonds will be issued in multiple weight denominations, starting from 1 gram onwards, providing flexibility in terms of purchasing gold which suits the needs of an individual.
One has an option to hold these bonds either in paper or demat form, whichever is convenient to an individual. Investments in this scheme are flexible, with one having an option to choose the amount he/she wishes to invest. There is no need for storage or safety of gold under this scheme, as the gold isn’t physically given to an investor immediately.
