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Draft Sovereign Gold Bond Scheme

Start Date :

Jun 17, 2015

Last Date :

Jul 02, 2015

17:00 PM IST (GMT +5.30 Hrs)

Submission Closed

The Finance Minister in his budget speech for the Union Budget 2015-16 made the following announcement: ...

The Finance Minister in his budget speech for the Union Budget 2015-16 made the following announcement:

“India is one of the largest consumers of gold in the world and imports as much as 800-1000 tonnes of gold each year. Though stocks of gold in India are estimated to be over 20,000 tonnes, most of this gold is neither traded, nor monetized. I propose to… develop an alternate financial asset, a Sovereign Gold Bond, as an alternative to purchasing metal gold. The Bonds will carry a fixed rate of interest, and also be redeemable in cash in terms of the face value of the gold, at the time of redemption by the holder of the Bond.

Accordingly, a draft outline of the Scheme has been prepared. Comments and views are invited on the draft scheme by 2nd July, 2015.

(The outline of the Sovereign Gold Bond Scheme is only at the draft stage and is being placed here to obtain public opinion. The scheme as it stands at this stage, does not imply any commitment from the government)

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Alok Kamat 10 years 9 months ago

I understand the drain on forex due to gold imports, but considering the frequent 'quantitative easing' in several major currencies since the economic crisis - perhaps India should rather encourage low-tariff gold imports by citizens, as a hedge for potential currency shocks in future.

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Alok Kamat 10 years 9 months ago

The fact that gold is often 'neither traded, nor monetized' should clearly indicate that it is seen as an investment to guard against sudden fall in the value of currency - and the FM is now proposing to create a 'gold bond' which is just a different fiat instrument with lower liquidity than actual cash. This bond is similar to selling the gold, putting proceeds into a fixed interest account, and later using it to purchase gold (at then-current rate) - it doesn't appear to be useful imho.

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Ravinder Kumar 10 years 9 months ago

Sorry to say but I'm not very much optimistic about this scheme as we Indians have an emotional attachment with gold ornaments.

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Kaushik Nihalani 10 years 9 months ago

NCDEX provides traded Spot Gold Prices in India, which can be easily used to benchmark Sovereign Gold Bonds. Also supporting the index is the fact that the prices are derived in a transparent manner. Hence I strongly believe it would be a good idea to use it as benchmark.

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Saminathan Gurusamy 10 years 9 months ago

The amount invested on Gold bonds should be exempted from income tax. (up to Rs. One Lakh or so.) The bonds must be sold online through banks.

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Rishu Gupta 10 years 9 months ago

Several people park their black money in gold which is one of safe heavens for them. This aspect needs to be tackled for achieving the desired goal. So far as love for gold of village and far flung areas people, rather every person, is concerned, new scheme must have mechanism of easy subscription & redemption to avoid unacceptability of scheme. Grievance redressal mechanism shall be extremely effective Appropriate awareness about benefits of availing such scheme is required for its success

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Krutika Kshirsagar 10 years 9 months ago

This is a good initiative since it motivates to curb buying of physical gold. Benchmarking it to the NCDEX prices will give it much needed transparency. A structure to the gold market in India was required and the Gold Bond Scheme fulfills it adequately. People need to be made aware so that the purpose of the scheme is fulfilled.

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suhail gupta 10 years 9 months ago

Sovereign Gold Bond an excellent initiative by govt to make a initial step in controlling black money. Few suggestions to be considered, please find the attachment :::

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KRISHNA KUMAR NATHANI 10 years 9 months ago

Bond should be linked with MCX/LBMA/RBI Fix as physical market follows MCX prices. Govt. can target Gold ETF's which are backed by physical Gold traded in NSE/BSE. Should consider giving Tax concessions to motivate investors buy bonds than physical Gold. Should use other distribution channels of Share/Commodity/Mutual Funds apart from Govt. agencies. Should consider investment upto 1 lac in cash without PAN. Distribution cost needs to be low. Indians are price sensitive in Gold.

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Abhishek Rohtagi 10 years 9 months ago

It is observed that the government will take feeds from NCDEX commodity exchange to sell the gold bonds to Indian public. This is a good decision. Recently, these NCDEX people have been starting trading of domestically manufactured gold hazir or spot trading which is good for Make in India. The other commodity exchanges are only doing international gold trading that too only satta or speculative futures trading. NCDEX is a good exchange which is doing Indian gold.

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