Swarnabharath

India has an estimated 20,000 tonnes of gold lying idle with Indian households and institutions. The following schemes are aimed at bringing the gold lying with citizens into the economy, and at reducing India’s dependence on gold imports.

Sovereign Gold Bond (SGB) Scheme

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.

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, charitable institutions, etc.

The Bonds bear interest at the rate of 2.50 per cent (fixed rate) per annum on the amount of initial investment. Interest will be credited semiannually to the bank account of the investor and the last interest will be payable on maturity along with the principal.

The Reserve Bank of India, in consultation with the Government of India, issues tranches of Sovereign Gold Bonds.

Sovereign Gold Bond Scheme 2022-23

Government of India, as of December 2022, has released Series I, II and III of Sovereign Gold Bond Scheme 2022-23. Under the Scheme, there will be a distinct series (Series I, II and III) for every tranche. The terms and conditions of the issuance of the Bonds shall be as per the above notification.

In terms of Government of India Notification No.4(6)-B(W&M)/2022 dated June 15, 2022, Sovereign Gold Bonds 2022-23 (Series I) was opened for subscription during the period June 20-24, 2022 with Settlement date June 28, 2022. The issue price of the Bond during the subscription period was Rs 5,091 (Rupees five thousand ninety one only) per gram, as also published by RBI in their Press Release dated June 17,  2022.          

In terms of Government of India Notification No.4(6)-B(W&M)/2022 dated December 15, 2022, Sovereign Gold Bonds 2022-23 (Series III) will be opened for subscription during the period December 19-23, 2022 with Settlement date December 27, 2022. The issue price of the Bond during the subscription period shall be Rs. 5409 (Rupees Five Thousand Four Hundred Nine only) per gram, as also published by RBI in their Press Release dated December 16, 2022.    

The Bonds will be sold through Scheduled Commercial banks(except Small Finance Banks and Payment Banks), Stock Holding Corporation of India Limited (SHCIL),Clearing Corporation of India Limited (CCIL),designated post offices, and recognised stock exchanges viz., National Stock Exchange of India Limited and Bombay Stock Exchange Limited.The features of the Bond are as under:

Benefits

• The Sovereign Gold Bonds will be available both in demat and paper form.
• The tenor of the bond is for a minimum of 8 years with option to exit from 5th year.
• They will carry sovereign guarantee both on the capital invested and the interest.
• Bonds can be used as collateral for loans.
• Bonds would be allowed to be traded on exchanges to allow early exits for investors who may so desire.
• The Capital gain tax arising on redemption of SGB to an individual is exempted.

How and where to buy it

Sovereign Gold Bonds will be issued on payment of rupees and denominated in grams of gold. Minimum investment in the bond shall be 1 grams. The bonds can be bought by Indian residents or entities and is capped at 500 grams.

Investors can apply for the bonds through scheduled commercial banks and designated post offices. NBFCs, National Saving Certificate (NSC) agents and others, can act as agents. They would be authorised to collect the application form and submit in banks and post offices.

Sovereign Gold Bond, 2020- 21

Government of India, in consultation with the Reserve Bank of India, has decided to issue Sovereign Gold Bonds-2020-21. The Sovereign Gold Bonds were issued in six tranches from April 2020 to September 2020 as per the calendar specified below:

For FAQS on SGB scheme, Click here.

Gold Monetisation scheme

It is a gold savings account which will earn interest for the gold that you deposit in it. Your gold can be deposited in any physical form – jewellery, coins or bars. This gold will then earn interest based on gold weight and also the appreciation of the metal value. You get back your gold in the equivalent of 995 fineness gold or Indian rupees as you desire (the option to be exercised at the time of deposit).

The Gold Monetisation Scheme will replace the existing Gold Deposit Scheme, 1999. However, deposits outstanding under the Gold Deposit Scheme will be allowed to run till maturity unless the depositors prematurely withdraw them.

Benefits

• The gold monetisation scheme earns interest for your gold jewellery lying in your locker. Broken jewellery or jewellery that you don't want to wear can earn interest for you in gold.
• Coins and bars can earn interest apart from the appreciation of value
• Your gold will be securely maintained by the bank.
• Redemption is possible in physical gold or rupees hence giving your gold purchase further earning opportunity.
• Earnings are exempt from capital gains tax, wealth tax and income tax. There will be no capital gains tax on the appreciation in the value of gold deposited, or on the interest you make from it.

Term involved

The designated banks will accept gold deposits under the Short Term (1-3 years) Bank Deposit as well as Medium (5-7 years) and Long (12-15 years) Term Government Deposit Schemes.

Who and where can the account be opened?

Resident Indians (Individuals, HUF, Trusts including Mutual Funds/Exchange Traded Funds registered under SEBI (Mutual Fund) Regulations and Companies) can make deposits under the scheme. The opening of gold deposit accounts will be subject to the same rules with regard to customer identification as are applicable to any other deposit account.

Modifications in the Gold Monetisation Scheme

In consultation with Government, RBI has issued a Master Direction on GMS on 21st January, 2016, which amends the Master Direction dated 22nd October, 2015 earlier issued by RBI on GMS. The changes made in the scheme are given below:-

• Premature redemption under Medium and Long Term Government Deposits (MLTGD) Any Medium Term Deposit will be allowed to be withdrawn after 3 years and any Long Term Deposit after 5 years. These will be subject to a reduction in the interest payable.
• Fees to be paid to Banks for their services i.e. gold purity testing charges, refining, storage and transportation charges etc. on Medium and Long Term Gold Deposits. Effectively the banks would be getting a 2.5 % commission for the scheme which will include the charges payable to the Collection and Purity Testing Centres/Refiners.
• Gold depositors can also give their gold directly to the refiner rather than only through the Collection and Purity Testing Centres (CPTCs). This will encourage the bulk depositors including Institutions to participate in the scheme.
• Bureau of Indian Standards (BIS) has modified the licensing condition for refiners already having National Accreditation Board for Testing and Calibration Laboratories (NABL) accreditation from the existing three years refining experience to one year refining experience. This is likely to increase the number of licensed refiners.
• BIS has published an Expression of Interest (EOI) on its website inviting applications from the more than 13,000 licensed jewellers to act as a CPTC in the scheme, provided they have tie-up with BIS’s licensed refiners.
• The quantity of gold collected under the scheme will be expressed up to three decimals of a gram. This will give the consumer better value for the gold deposited.
• Gold to be deposited with the CPTCs/Refineries can be of any purity. The CPTC/Refiner will test the gold and determine its purity which will be basis on which the deposit certificate will be issued.
• Banks are free to hedge their positions in the case of short-term deposits.
• Issues like the method of interest calculation and mechanism for taking loans against GMS deposits have also been clarified. Indian Banks Association (IBA) will communicate the list of the BIS licensed CPTCs and refiners to the banks.To increase awareness among depositors, Government had continued the Media campaign in AIR and FM radio. Print media and Mobile SMS campaign is also being undertaken.

It is again clarified that Tax exemptions under the GMS include exemption of interest earned on the gold deposited and exemption from capital gains made through trading or at redemption. It is also reiterated that as per CBDT instructions No. 1916 dated 11th May, 1994, in course of IT Search u/s 132, gold jewellery to the extent of 500 gms per married lady, 250 gms per unmarried lady and 100 gms per male member of the family, need not be seized by tax authorities.

The scheme has been further modified on 31st March, 2016. Now, for the gold deposited under Medium and Long Term Government Deposits (MLTGD), the redemption of principal at maturity shall, at the option of the depositor, be either in Indian Rupee equivalent of the value of deposited gold at the time of redemption or in gold. Where the redemption of the deposit is in gold, an administrative charge at a rate of 0.5% (w.e.f. August 04, 2022)of the notional redemption amount in terms of INR shall be collected from the depositor. However, the interest accrued on MLTGD shall be calculated with reference to the value of gold in terms of Indian Rupees at the time of deposit and will be paid only in cash.

Further amendments to the Scheme was made on 4 August 2022. The changes have been made related to Guidelines for Renewal/Redemption of MLTGD.

To view the updated scheme, click here.

Indian Gold Coin

The Indian Gold Coin is part of Indian Gold monetisation program. The coin will be the first ever national gold coin will have the national emblem of Ashok Chakra engraved on one side and the face of Mahatma Gandhi on the other side. Initially, the coins will be available in denominations of 5 and 10 grams. A 20 grams bar/bullion will also be available. The Indian Gold Coin is unique in many respects and will carry advanced anti-counterfeit features and tamper-proof packaging that will aid easy recycling.

Coin features

• Purity - The Indian gold coin will be of 24 karat purity and 999 fineness.
• Hallmarked - All coins will be hallmarked as per the BIS standards.
• Security - The tamperproof packaging and advanced anti-counterfeit features on the coin cover make s it very safe and easily recyclable.
• Availability - This coin will distributed through designated & recognised Metals and Minerals Trading Corporation of India (MMTC) outlets.

Source : RBI