Sovereign Gold Bond scheme

Q.  Which of the following is/are the intentions behind the Sovereign Gold Bond (SGB) scheme?

1) Increase financial savings.
2) Decrease demand for gold
3) To mobilize the ideal gold in country and put it to productive use.
- Published on 21 Mar 16

a. 1, 3
b. 2, 3
c. 1, 2
d. All of the above

ANSWER: 1, 2
 
  • The objective of the scheme is to reduce the demand for physical gold.
  • It also wants to shift a part of the domestic savings used for purchase of gold, into financial savings.
  • When one best buys a gold bond by depositing money he is issued a certificate by RBI on the behalf of Government of India which is equivalent to 10gm of physical gold .Prices of this gold bond is linked to prices of gold in market that time.
  • Gold bond will be issue in denomination of 2gm, 5gm, 10gm or other denominations. There is cap on maximum value of bonds allotted to per person should be 500gm.
  • The tenor of gold bonds could be between 5 to 7 years.
  • One can also take loans by pledging these gold bonds to bank. These bonds are easily traded on commodity exchanges

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