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Draft outline of The Sovereign Gold Bond Scheme - Will be issued on payment of money and linked with the price of gold (For discussion purposes only)

Dated:- 26-6-2015 - I. Introduction Sovereign Gold Bonds will be issued on payment of money and would be linked to the price of gold. II. Objective Need for a Sovereign Gold Bond The main idea is to reduce the demand for physical gold. Shift .....

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s and a sales commission to the intermediate channels, to be reimbursed by Government. IV. Sale to Indian entities The bond would be restricted for sale to resident Indian entities. The cap on bonds that may be bought by an entity would be at a suit .....

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e actual rate will have to be market determined. On maturity, the investor receives the equivalent of the face value of gold in Rupee terms. The rate of interest on the bonds will be payable in terms of grams of gold. The interest will be calculated .....

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s may collect money / redeem bonds on behalf of government (for a fee, the amount would be as decided). The bonds will be issued in denominations of 2, 5, 10 grams of gold or other denominations. The tenor of the bond could be for a minimum of 5 to .....

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s collateral for loans. The Loan To Value ratio be set equal to ordinary gold loan mandated by RBI from time to time. Bonds to be easily sold, traded on commodity exchanges. KYC norms to be the same as that for gold. Bonds to have a sovereign guar .....

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nation. VI. Hedging The agency issuing the Sovereign Gold Bonds will be running a price risk on the amount of bonds issued. The price risk will comprise the price of gold in USD and the USD/INR exchange rate risk. Hedging of this risk is expensive a .....

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