Gold Bonds to go on sale on Nov 26

Applications open on Nov 5

October 30, 2015 07:08 pm | Updated March 28, 2016 04:26 pm IST - NEW DELHI

"People holding idle gold can deposit it in banks for either short, medium or long term." Photo: K. K. Mustafah

"People holding idle gold can deposit it in banks for either short, medium or long term." Photo: K. K. Mustafah

The Government on Friday announced that it will issue Sovereign Gold Bonds, a part of its Gold Monetisation Scheme, on November 26. Applications for the bonds will be accepted between November 5 and November 20.

Sovereign Gold Bonds

» Proposed Sovereign Gold Bonds (SGBs) is part of government’s budget proposal along with Gold Monetisation Scheme (GMS)
» While GMS proposes to ‘monetize’ India’s massive stock of physical gold, SGBs intend to convert the investment demand for physical gold into paper demand
» If subscribed fully in the first year, SGBs could result in saving of $2 billion on gold imports at current prices

“The Government of India, in consultation with Reserve Bank of India (RBI), has decided to issue Sovereign Gold Bonds. The Bonds will be issued on November 26, 2015. Applications for the bond will be accepted from November 05, 2015 to November 20, 2015,” the Government said in a notification.

“The Bonds will be sold through banks and designated post offices as may be notified. The borrowing through issuance of the Bond will form part of market borrowing programme of Government of India,” the notification added.

>All you need to know about gold monetisation scheme

The gold bonds will be restricted to resident Indian entities including individuals, HUFs, trusts, Universities, charitable institutions. The tenure of the Bonds will be eight years, with an exit option after five years.

Those buying the bonds will not be allowed to buy less than two grams-worth or more than 500 grams per person per financial year.

The government also said that the price of the bonds will be set in rupees, based on the previous week’s average closing price of gold published by the India Bullion and Jewellers Association. The bonds can be used as collateral for loans, the notification said.

While announcing the Union Cabinet’s decision to approve the Sovereign Gold Bond Scheme and the Gold Monetisation Scheme on September 9, Finance Minister Arun Jaitley had said that the two schemes combined could potentially bring into the economy an estimated 20,000 tonnes of idle gold lying with Indian consumers. The schemes are also aimed at reducing India’s dependence on gold imports.

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