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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 part of the estimated 300 tons of physical bars and coins purchased every year for Investment into demat gold bonds. III. Agency Bonds will be issued on behalf of the Government of India by RBI. Issuing agency will need to pay distribution cost .....

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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 on 10,000 at a certain per cent say 2 or 3%. The price of gold may be taken from NCDEX/ London Bullion Market Association/RBI and the Rupee equivalent amount may be converted at the RBI Reference rate on issue and redemption. Banks/NBFCs/Post Office .....

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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 guarantee. Capital gains tax treatment will be the same as for physical gold. This will ensure that an investor is indifferent in terms of investing in these bonds and in physical gold- as far as the tax treatment is concerned. This is still under exami .....

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