The Union Cabinet chaired by the Prime Minister Shri Narendra Modi has given approval for revision of guidelines of Sovereign Gold Bonds (SGB) Scheme with a view to achieve its intended objectives.
Two sets of changes have been made in the scheme:
1. Specific changes have been made in the attributes of the scheme to make it more attractive, mobilise finances as per the target and reduce the economic strains caused by imports of gold and reduce the Current Account Deficit (CAD).
2. Flexibility has been given to Ministry of Finance to design and introduce variants of SGBs with different interest rates and risk protection / pay-offs that would offer investment alternatives to different category of investors. Ministry of Finance (the issuer) has been delegated this power to amend / add to the features of the Scheme with approval of the Finance Minister to reduce the time lag between finalizing the attributes of a particular tranche and its notification.
Following specific changes in the scheme have been approved:
i. The investment limit per fiscal year has been increased to 4 kg for individuals, 4 Kg for Hindu Undivided Family (HUF) and 20 Kg for Trusts and similar entities notified by the Government from time to time.
ii. The ceiling will be counted on Financial year basis and will include the SGBs purchased during the trading in the secondary market.
iii. The ceiling on investment will not include the holdings as collateral by Banks and Financial institutions.
iv. SGBs will be available ‘on tap’. Based on the consultation with NSE, BSE, Banks and Department of Post, features of product to emulate ‘On Tap’ sale would be finalised by Ministry of Finance.
Source- Press Information Bureau (PIB)