The Cabinet today approved revision of guidelines of Sovereign Gold Bonds Scheme with a view to achieve its intended objectives.
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.
Flexibility has been given to Ministry of Finance to design and introduce variants of Sovereign Gold Bonds with different interest rates and risk protection or pay-offs that will offer investment alternatives to different category of investors. Ministry of Finance which is the issuer has been delegated the power to amend or 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.
Such flexibility will be effective in addressing the elements of competition with new products of investment, to deal with very dynamic and sometimes volatile market, macro-economic and other conditions such as gold price.
As per the changes, the investment limit per fiscal year has been increased to 4 kilogram for individuals, 4 kilogram for Hindu Undivided Family and 20 kilogram for Trusts and similar entities notified by the Government from time to time.
The ceiling will be counted on Financial year basis and will include the Sovereign Gold Bonds purchased during the trading in the secondary market. The ceiling on investment will not include the holdings as collateral by Banks and Financial institutions. Sovereign Gold Bonds 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 will be finalised by Ministry of Finance. To improve liquidity and tradability of Sovereign Gold Bonds, appropriate market making initiatives will be devised.
Market makers, can be commercial banks or any other public sector entity, such as MMTC or any other entity as decided by the Centre. The Government may allow higher commission to agents if so felt necessary.
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