GS PAPER II: Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment.

Context: The Government of India, in consultation with the Reserve Bank of India, has decided to issue Sovereign Gold Bonds. The Sovereign Gold Bonds will be issued in six tranches from May 2021 to September 2021.

What is Sovereign Gold Bond (SGB)? Who is the issuer?

• SGBs are government securities denominated in grams of gold.
• They are substitutes for holding physical gold.
• Investors have to pay the issue price in cash and the bonds will be redeemed in cash on maturity.
• The Bond is issued by Reserve Bank on behalf of Government of India.
• The SGB offers a superior alternative to holding gold in physical form. The risks and costs of storage are eliminated.
• Investors are assured of the market value of gold at the time of maturity and periodical interest.
• SGB is free from issues like making charges and purity in the case of gold in jewellery form. The bonds are held in the books of the RBI or in demat form eliminating risk of loss of scrip etc.
• Persons resident in India as defined under Foreign Exchange Management Act, 1999 are eligible to invest in SGB.
• Eligible investors include individuals, HUFs, trusts, universities and charitable institutions.
• Individual investors with subsequent change in residential status from resident to non-resident may continue to hold SGB till early redemption/maturity.
• The Bonds are issued in denominations of one gram of gold and in multiples thereof.
• Minimum investment in the Bond shall be one gram with a maximum limit of subscription of 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 per fiscal year

https://pib.gov.in/PressReleasePage.aspx?PRID=1718141

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