The government of India recently launched a Sovereign Gold Scheme to provide an alternate option when it comes to owning gold. This scheme aims to reduce the demand for physical gold, thereby keeping a tab on gold imports and utilising resources effectively.
With the Reserve Bank of India issuing these gold bonds, it brings in transparency and trust, providing an avenue wherein people can own gold without having to worry about its storage or safety.
- Under the Sovereign Gold Bond Scheme, the Reserve Bank of India will issue the bonds on behalf of the Government of India.
- The bonds will be sold at post offices and banks and issued in denomination of gram. They will issue these bonds on payment of money.
- Later on, the bonds will be connected to the price of gold. 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 issued for the year 2015-16.
Eligibility for Sovereign Gold Bond Scheme
Individuals who are keen to participate in the Sovereign Gold Bond Scheme need to satisfy the following simple eligibility criteria.
- Indian resident – This scheme is open only to Indian residents, with the Foreign Exchange Management Act of 1999 formulating the eligibility criteria.
- Individuals/groups – Individuals, associations, trusts, HUFs, etc. are all eligible to invest in this scheme, provided they are Indian residents. Under the scheme, one can jointly invest in bonds with other eligible members.
- Minors – This bond can be purchased by guardians or parents on behalf of minors.