RBI unveils Series VI Sovereign Gold Bond Scheme

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    • The Reserve Bank of India (RBI) has announced the Sovereign Gold Bond Scheme 2021-22 Series VI, which will be open for subscription for the period August 30-September 3, 2021.

    About the Scheme

    • Launched in: November 2015.
    • Objective: To reduce the demand for physical gold and shift a part of the domestic savings (to purchase of gold) into financial savings.
      • The move was also aimed at changing the habits of Indians from saving in the physical form of gold to a paper form with Sovereign backing.
    • Issuance: The Gold Bonds are issued as Government of India Stock under the Government Securities (GS) Act, 2006.
      • These are issued by the Reserve Bank of India (RBI) on behalf of the Government of India.
      • These bonds will be sold through various Commercial banks, Stock Holding Corporation of India Limited (SHCIL), designated post offices (as may be notified) and recognised stock exchanges viz., National Stock Exchange of India Limited and Bombay Stock Exchange, either directly or through agents.
    • Eligibility: It is restricted for sale to resident individuals, Hindu Undivided Families (HUFs), trusts, universities and charitable institutions.
    • Price: The price is calculated based on the spot price of gold as provided by the Mumbai-based India Bullion and Jewellers Association (IBJA).
    • Term: The maturity period is 8 years, with an option to exit the investment after the first five years.
    • Investment Limit: Gold bonds can be purchased in multiples of one unit.
      • The upper limit for retail (individual) investors and HUFs is 4 kilograms (4,000 units) each per financial year. 
      • For trusts and similar entities, an upper limit of 20 kilograms per financial year is applicable.
      • The minimum permissible investment is 1 gram of gold.
    • Interest Rate: A fixed rate of 2.5% per annum is applicable on the scheme, payable semi-annually.
      • The interest on Gold Bonds shall be taxable as per the provision of the Income Tax Act, 1961.
    • Collateral: Bonds can be used as collateral for loans. The loan-to-value (LTV) ratio is to be set equal to the ordinary gold loan mandated by the Reserve Bank from time to time.

    Source: TH