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Prelims Syllabus : Economics- Banking; Governance- Schemes, Policies Mains Syllabus : GS-III- Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment.

Why in News?

  • The Government of India, in consultation with the Reserve Bank of India, has decided to issue Sovereign Gold Bonds.

Sovereign Gold Bond Scheme:

  • The SGB will be issued in six tranches from October 2019 to March 2020
  • The Bonds will be sold through:
    • Scheduled Commercial banks (except Small Finance Banks and Payment Banks)
    • Stock Holding Corporation of India Limited (SHCIL)
    • Designated post offices
    • Recognised stock exchanges viz., National Stock Exchange of India Limited and Bombay Stock Exchange Limited
  • The main features of the SGB are:
    • It will be issued by Reserve Bank India on behalf of the Government of India.
    • The Bonds will be restricted for sale to resident individuals, Universities, Charitable Institutions, HUFs and Trusts
    • The tenor of the Bond will be for a period of 8 years with exit option after 5th year to be exercised on the interest payment dates.
    • The minimum permissible investment will be 1 gram of gold.
    • The maximum limit of subscribed shall be 4 KG for individual and HUF each and 20 Kg for trusts and similar entities per fiscal (April-March) notified by the Government from time to time.
    • In case of joint holding, the investment limit of 4 KG will be applied to the first applicant only.The investors will be compensated at a fixed rate of 2.50 % per annum payable semi-annually on the nominal value.
    • Bonds can be used as collateral for loans.
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