Why Govt May Not Sell Sovereign Gold Bonds Anymore? Reports

As per media reports, while the SGB turned out to be a very profitable investment instrument for the investors, the pay out turned hefty for the government coffers.

New Delhi: The government may not sell any more of sovereign gold bond (SGB), CNBC-TV18 reports citing government sources said.

CNBC-TV18 added, while the SGB turned out to be a very profitable investment instrument for the investors, the pay out turned hefty for the government coffers.

In the 67 tranches of SGB that the Reserve Bank of India (RBI) issued on behalf of the government, investors contributed Rs 72,274 crore. Four of those have fully matured, meaning that the bond buyers have received their money back.

In March 2020, the government owed less than Rs 10,000 crore to investors; by the end of March 2020, that amount had increased by over nine times to Rs 85,000 crore, according to the latest budget documents.

The market appears ready even in advance of an official announcement. In the secondary markets, demand for sovereign gold bonds has surged. As of August 14, people were spending up to 8% more than the government-set reference price.

The National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE) offer trading opportunities in the cash segments for all SGB series, which are listed in the secondary market. Through demat accounts, they can be purchased and sold.

1st tranche of Sovereign Gold Bond Matured In November 2023

The first tranche of Sovereign Gold Bond (SGB), initiated in 2015 is due for redemption on on November 30, 2023. "Accordingly, the price for the final redemption due on November 30, 2023 shall be ₹6132/- (Rupees Six thousand one hundred thirty-two only) per unit of SGB based on the simple average of closing price of gold for the week November 20-24, 2023," the central bank added.

What is Sovereign Gold Bond Scheme?

Sovereign Gold Bond Scheme 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.

How Is Sovereign Gold Bond Scheme being sold?

The bonds is sold through scheduled commercial banks (except Small Finance Banks and Payment Banks), Stock Holding Corporation of India Limited (SHCIL), designated post offices, and recognised stock exchanges viz., National Stock Exchange of India Limited and Bombay Stock Exchange Limited.

Who can buy Sovereign Gold Bond Scheme?

The Bonds is restricted for sale to resident individuals, HUFs, Trusts, Universities and Charitable Institutions.