Indian Government Declares Launch of Sovereign Gold Bond Scheme in Five Tranches

SEATTLE (Scrap Monster): The Indian government announced launch of Sovereign Gold Bond Scheme FY19 on Monday. The move is part of government’s efforts to curb gold imports into the country and reduce the rising current account deficit (CAD), by putting breaks on physical gold purchases. Incidentally, gold along with oil has played a major role in the expansion of the country’s CAD situation.

According to government announcement, gold bonds will be issued every month from October 2018 to February 2019. The bonds will carry a 2.5% annual interest, similar to the ones issued before. Further, it will be exempted from capital gains tax upon redemption. The bonds will be issued through banks, Stock Holding Corporation of India Ltd, designated post offices, the National Stock Exchange and the Bombay Stock Exchange. The bond validity will be for a period of ten years. The payment for the bonds up to INR 20,000 can be made through cash or else through demand draft, bank cheque or electronic transfer.

The issue dates for the bonds to eligible applicants are fixed as 23^rd October and 13^th November in 2018, 1^st January, 22^nd January and 12^th February in 2019. The applications will be accepted four days prior to respective issue date every month.

Initially launched in November 2015, along with gold monetization scheme and Indian gold coin, the sovereign gold bond scheme aims to reduce the demand for physical gold by shifting a part of domestic savings into paper gold.