Sovereign gold bond

Context

  • The federal government has determined to a new series of sovereign gold bonds will be available at Rs 3,214 per gram between January 14 and January 18.
  • Investors who apply and make payment online for the Sovereign Gold Bond Scheme 2018-19 – Series V will get a discount of Rs 50 per gram

Key Facts

  • “The issue price of the bond during this subscription period shall be Rs 3,214 per gram with the settlement date of January 22, 2019,” the Ministry said in its statement.
  • The Reserve Bank of India (RBI) on 11 January,2019 said the nominal value of the bond is based on the simple average closing price for gold of 999 purity of the last three business days (January 9-11) of the preceding week.
  • “The Government of India in consultation with the RBI has decided to allow discount of Rs 50 per gram from the issue price to those investors who apply online and the payment is made through digital mode,”
    For such investors, the issue price of gold bond will be Rs 3,164 per gram of gold.
  • Sovereign gold bonds, issued on behalf of the government by the RBI to resident Indian entities, are denominated in grams of gold. Investment in these bonds can be done in multiples of one gram with a maximum limit of 500 gms per person per year.

Sovereign gold bond scheme

  • The Sovereign gold bond scheme was launched by the federal government in 2015 to scale back the demand for bodily gold by shifting part of the bodily bars and cash bought yearly for funding into gold bonds. The options of the scheme are:
  • Sovereign gold bonds are issued by the RBI on behalf of the government Sovereign gold bonds are denominated in grams of gold and investments will be performed in multiples of 1 gram with a most restrict of four kg per particular person.
  • The Resident Indians together with people (in his capability as a person, or on behalf of minor little one, or collectively with every other particular person), HUFs, Trusts, Universities and Charitable Establishments are eligible to avail these bonds.
  • Bonds can be tradable on inventory exchanges.The Sovereign gold bonds additionally assist in sustaining the present account deficit as many of the demand for gold in India is met by means of imports.
  • The tenor of the Bond is of eight years with an exit possibility in fifth, sixth and seventh 12 months.
  • The buyers will even be compensated at a set rate of interest of two.50 per cent every year payable semi-annually on the nominal worth.
    Bonds can be utilized as collateral for loans.
  • The curiosity on Gold Bonds shall be taxable and are exempted from the capital positive factors tax on redemption.

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