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  1. Sovereign Gold Bonds: You can buy up to 4 kg of gold under SGB scheme now

Sovereign Gold Bonds: You can buy up to 4 kg of gold under SGB scheme now

In a bid to make Sovereign Gold Bonds more attractive to investors as well as to mobilise finances as per the target and reduce the economic strains caused by imports of gold, the government has approved revision of guidelines of the SGB Scheme.

By: | Published: July 27, 2017 1:22 PM
 Sovereign Gold Bonds, SGB, investment limit raised, Ministry of Finance, CAD,  As an individual you can buy up to 4 kg of gold under this scheme now as against the earlier limit of 500 grams per person per fiscal year.

Wanted to buy more Sovereign Gold Bonds (SGBs), but were constrained by the investment limit? Here is some good news for you. As an individual you can buy up to 4 kg of gold under this scheme now as against the earlier limit of 500 grams per person per fiscal year.

In a bid to make Sovereign Gold Bonds (SGBs) more attractive to investors as well as to mobilise finances as per the target and reduce the economic strains caused by imports of gold, the government has approved revision of guidelines of the Sovereign Gold Bonds Scheme.

First, specific changes have been made in the attributes of the scheme to make it more attractive, mobilise finances as per the target and reduce the economic strains caused by imports of gold and reduce the Current Account Deficit (CAD).

Secondly, flexibility has been given to the Ministry of Finance to design and introduce variants of SGBs with different interest rates and risk protection / pay-offs that would offer investment alternatives to different category of investors. The Ministry of Finance (the issuer) has been delegated this power to amend / add to the features of the scheme with approval of the Finance Minister to reduce the time lag between finalizing the attributes of a particular tranche and its notification. Such flexibility will be effective in addressing the elements of competition with new products of investment, to deal with very dynamic and sometimes volatile market, macro-economic and other conditions such as gold price.

Specific changes in the scheme have also been approved:

i. The investment limit per fiscal year has been increased to 4 kg for individuals, 4 kg for Hindu Undivided Family (HUF) and 20 kg for Trusts and similar entities notified by the government from time to time.

ii. The ceiling will be counted on financial year basis and include the SGBs purchased during the trading in the secondary market.

iii. The ceiling on investment will not include the holdings as collateral by banks and financial institutions.

iv. SGBs will be available ‘on tap’. Based on the consultation with NSE, BSE, Banks and Department of Post, features of product to emulate ‘On Tap’ sale would be finalised by the Ministry of Finance.

v. To improve liquidity and tradability of SGBs, appropriate market making initiatives will be devised. Market makers could be commercial banks or any other public sector entity, such as MMTC or any other entity as decided by the government.

vi. The government may, if so felt necessary, allow higher commission to agents.

It may be noted that Sovereign Gold Bond (SGB) Scheme was notified by the government on November 05, 2015 after due approval of the Cabinet. The main objective of the scheme was to develop a financial asset as an alternative to purchasing metal gold. The target was to shift part of the estimated 300 tons of physical bars and coins purchased every year for investment into ‘demat’ gold bonds. The target mobilisation under the scheme was at Rs 15,000 crore in 2015-16 and at Rs10,000 crore in 2016-17. The amount so far credited in the government account is Rs 4,769 crore.

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  1. S
    Sadasivan
    Jul 28, 2017 at 2:45 am
    The NDA claims that the Government has "No Business to be in Business".then how come it:- 1.Does this, by Gold Monetization and Sovereign Gold Bond? 2 vesting in shares via LIC,EPFO etc? 3.Makes profit by Divesting even profit-making Public Sector Cos? 4.Forces buyback on Public sector Units like Oil India,recently?
    Reply
    1. S
      Sadasivan
      Jul 28, 2017 at 2:37 am
      This does not make sense, without allowing the individual holding limits ,of Bullion and jewelry, for a married Woman,a Virgin Girl and a Man,to be raised in commensurate with this.that is 4 Kg!As of now,this is very low.
      Reply

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