Sovereign Gold Bond

Context:

  • The Government of India has notified that the Sovereign Gold bonds are open for subscription.
  • The issue price of the Sovereign Gold Bond during the subscription period will be Rs.5091.

About Sovereign Gold Bond

  • The Sovereign Gold Bond is issued by Reserve Bank of India on behalf of the Government of India
  • The minimum investment to be made is the value of one gram of gold, the bond can be purchased in terms of quantity of gold.
  • The bondholders will be paid an interest of 2.5% annually on the total value, the interest will be paid to the bondholder semi-annually.
  • The maturity period for Sovereign Gold Bond is eight years, with an option of premature exit after five years.

What is the purpose of its introduction?

  • The Sovereign Gold Bond scheme which was initiated in the year 2015 was introduced with a purpose of reducing the demand of physical gold.
  • By reducing the usage of physical gold, the domestic savings instead of being lying as physical gold can be transferred into financial savings.
  • This also helps the buyer in terms of storage cost, problem of theft and damage.
  • Apart from this this bond also bears with it an interest which is paid semi-annually.
  • And also, physical gold depreciates with time, it will not hold the same value as at the time it was purchased.

 

            Source The Hindu

 

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