Gold Monetisation Scheme : All you need to know | Important Points Soverign Gold Bond Scheme - IBPS Exams

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Gold Monetisation Scheme : All you need to know | Important Points Soverign Gold Bond Scheme

The Cabinet today approved Gold Bond and Gold Monetisation schemes to reduce the metal's demand in physical form and fish out idle gold lying with households and other entities. The Gold Bond scheme will have an annual cap of 500 grams per person and such bonds would be issued for a period of 5-7 years.

The Budget 2015-16 had proposed to launch a Sovereign Gold Bond (SGB) scheme to develop a financial asset as an alternative to gold. Speaking to the Press, Finance Minister Arun Jaitley said the Gold Monetisation Scheme will channelise country's idle gold assets.


So how does the scheme work? 

Idle gold can be depositd in banks for either short, medium or long term Depositors of gold will earn interest on their metal accounts Quantity of gold to be credited will depend on the purity of gold. The scheme will let individuals buy gold bonds instead of physical gold Gold can be in any form, bullion or jewellery individuals and institutions can deposit as low as 30 gm of gold Mobilised gold will be used in auctioning and replenishing RBI's gold reserves

How it generally works?

When a customer brings in gold to the counter of specified agency or bank, the purity of gold is determined and exact quantity of gold is credited in the metal account. Customers may be asked to complete KYC (know-your-customer) process. The deposited gold will be lent by banks to jewellers at an interest rate little higher than the interest paid to customer.

How is the interest rate calculated?

Both principal and interest to be paid to the depositors of gold, will be ‘valued’ in gold. For example if a customer deposits 100 gm of gold and gets one per cent interest, then, on maturity he has a credit of 101 gram.

The interest rate is decided by the banks concerned.

Soverign Gold Bond Scheme

The RBI will issue gold bonds on behalf of government Annual cap under this Scheme to be 500 gm per person Such bonds would be issued for a period of 5-7 years.

The bonds will be issued in 2, 5 and 10 grams of gold or other denominations Interest on gold bonds to be decided by govt from time to time On maturity, redemption will only be in rupees

Redemptions can be done through banks, NBFC and Post Offices Capital gains tax treatment will be same as for physical gold for individual investors

Amount raised via SGBS to be used in lieu of govt borrowing Gold Reserve Fund to take care of risk in increase of gold price Risk of increase in gold price to be borne by government Depositor to be given option to roll over bond for 3 years or more if gold price falls Exemption for capital‎ gains on redemption of SGB will be considered in the next 2016-2017

Credits : MoneyControl & The Hindu
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Tags : Gold Monetisation Scheme : All you need to know | Important Points Soverign Gold Bond Scheme IBPS PO Clerks RRB Essay Pdf Free Download Exams The Cabinet today approved Gold Bond and Gold Monetisation schemes to reduce the metal's demand in physical form and fish out idle gold lying with households and other entities. The Gold Bond scheme will have an annual cap of 500 grams per person and such bonds would be issued for a period of 5-7 years.

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