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Sovereign Gold Bond scheme vs Gold Monetization Scheme

Published on Wednesday, September 23, 2015
Government of India recently launched the Sovereign gold bond scheme aimed at discouraging people to invest in physical gold and encouraging them to invest in demat gold bonds to reduce the import of gold.
gold bond

Objectives of Sovereign Gold Bond scheme

  1. To reduce the demand of gold as India is biggest importer of gold . 
  2. To encourage people to invest in demat gold bonds. 

Features Of Sovereign Gold Bond Scheme

In this scheme prices of gold bond is linked to actual gold prices prevailing in market that time and interest of 2 to 3% will be given by government.When one best buys a gold bond by depositing money he is issued a certificate by RBI on the behalf of Government of India which is equivalent to 10gm of physical gold .Prices of this gold bond is linked to prices of gold in market that time. Gold bond will be issue in denomination of 2gm,5gm,10gm or other denominations. There is cap on maximum value of bonds allotted to per person should be 500gm.

The tenor of gold bonds could be between 5 to 7 years, One can also take loans by pledging these gold bonds to bank. These bonds are easily traded on commodity exchanges .In first installment government has decided to issue bonds for 13,500 crore equivalent to 50 tonnes of gold .

KYC for gold bonds is same as when we buy 50,000Rs above gold .Need identification proof like PAN card or Id card.

Capital gain tax is same as for physical gold.

Gold Monetization Scheme

In other scheme launched by government of India known as Gold Monetization scheme in which a person can deposit his or her ideal gold in any foam with authorized dealer which would be melted and stored in bullion .Minimum of 30gms of gold can be deposited

Objective of Gold Monetization Scheme :-

  1. To mobilize the ideal gold in country and put it to productive use . 
  2. To give customers a opportunity to earn interest on ideal gold . 
In this scheme a person can deposit his or her ideal gold in any foam like jewellery to authorized dealer or bank which is melted and stored as bullion. Banks will pay interest on deposited gold. Both principal and interest will be value in gold .On maturity customer can take in foam of gold or in cash .Minimum deposit period will be 1 yr and thereafter multiples of one year.

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