Sovereign Gold Bond Scheme

Sovereign Gold Bond Monetization Scheme

Gold has always been considered a safe heaven by the investors not only in India but around the globe. In almost every case of economic turmoil they’ve turned to gold to save their money, which leads to a rise in the prices of gold. In a nutshell, when everything sinks, gold rises to new highs. Same is about to happen in upcoming days as a result of Brexit. As UK’s economy will go through a tough phase, gold will be the investment of choice around the world, due to which its prices will soar. Our government has been eyeing this opportunity, and it has now opened a window to its people for benefiting from this rally of gold.

Gold monetization and gold bond scheme

Product Description

Sovereign Gold Bond Scheme is an attractive gold investment product released by Government of India in collaboration with Reserve Bank of India (RBI). They’ll allow investors to invest in gold without owning the gold physically – yep, rather than holding gold you’ll be issued a holding certificate, which will be a gold bond. The bonds will be issued at the price of gold.

Eligibility Criteria

Any resident of India including individuals, HUFs Trusts, Charitable Institutions, Universities will be able to invest in Sovereign Gold Bonds.

Required KYC Documentation

Just like with other government schemes, if you want to take advantage of this scheme you’ll have to submit thorough KYC Documentation. You’ll need a valid photo ID proof, Aadhar Card, PAN/TAN Card and Passport. It’s same as that of purchasing gold.

Denomination and Tenure

The bonds will be issued in denominations of 1 gms of gold for a tenure of 8 years. However, exit options will be available from 5th year. Exit before 5 years is not allowed.

Size Limitations

The minimum size for which one can buy these gold bonds is 1 gm. The maximum, on the other hand, is 500 gms per person/organization/entity. In case of joint holders, the maximum investment limit shall be applied to first applicant.

Issued by

The bonds will be issued by Reserve Bank of India on behalf of Government of India. They’re covered under the GS Act of 2006 and investors who invest in them will be provide a legitimate Holding Certificate according to the act. The certificate can be held in both paper and demat formats.

Issue Price

The issue price will depend on the average price of 99.9% pure gold in the week preceding to the subscription of investor. The government  will accept the pricing of India Bullion and Jewellers Association Limited and will calculate the average price of gold during the week preceding to subscription.

Interest Rates

Aside from the rise in price of gold these bonds will also provide the benefit of interest to the investors. Yes – they’ll attract interest at the rate of 2.75% per annum, which will be paid twice (semi-annually) in an year.

Other Benefits

The bonds will also provide the benefit of acting as a collateral for bank loans to their investors. While you won’t be able to exit from them before five years, you’ll be able to put them as collateral for bank loans in case you need your money before that period.

Points of Sale

The bonds are available for investment in all Post Offices, major stock exchanges (i.e. BSE and NSE) and offices of Stock Holding Corporation of India Limited. They may also be available through the agents of some of these organizations.

Payment Options

If payment amount is less than Rs. 20,000 then investor(s) will be able to get it done in cash. Otherwise there’ll be options of electronic bank transfer, demand draft or cheque issued in the name of investor.

Redemption Price

Similar to issuance price, the redemption price will be decided on the average price of 99.9% pure gold during week prior to the date of redemption. Once again, government will accept pricing only from India Bullion and Jewellers Association.


The bonds will  attract tax as per Indian Income Tax Act of 1961. However, the capital gains tax on redemption of these bonds won’t be levied by the government. In case of bond transfer the indexation benefits will also be provided to long term capital gains arising to the person.


The bonds won’t be tradable on BSE/NSE stock exchanges from a date. The date from which this will happen is not fixed yet and it’ll be notified by the RBI/Government of India.

Commission of Offices/Agents

Offices issuing the bonds will receive a commission equal to 1% of total subscription amount, and they’ll be liable to provide at least half of that commission to their agents/sub-agents for the business provided by them.


Given below are the particulars of this awesome gold investment scheme:

Name Sovereign Gold Bond Scheme
Launched by RBI and Central Government
Denominated in 1 gm of gold
Tenure 8 years
Interest 2.75% annual
Exit options Available from 5th year
Other benefits Can be used as collateral for loans

We hope that these bonds will help Indian people earn a good ROI on their investments in the future.

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