All about RBI’s Sovereign Gold Bond Scheme

By Namrata Singh, CFP & Chaitali Shah, MA (Economics)

Mumbai: India is one of the largest consumers of gold in the world. Gold is considered to be auspicious in Indian Culture. It is a sign of wealth and prosperity.

Gold is considered an inflation hedge—increasing in value as the purchasing power of the rupee declines. It has a relatively low correlation with other asset classes like Equity and Fixed Income

The Reserve Bank of India on behalf of the Government of India introduced the Sovereign Gold Bond (SGB) scheme in November, 2015 under the Gold Monetization scheme.

Eligibility  Criteria

  • Resident individuals,
  • HUFs,
  • Trusts,
  • Universities
  • Charitable institutions

Individual investors with subsequent change in residential status from resident to non-resident may continue to hold SGB till early redemption/maturity.

Bonds are sold through

  • Offices or branches of Nationalised Banks
  • Scheduled Private Banks
  • Scheduled Foreign Banks
  • Designated Post Offices
  • Stock Holding Corporation of India Ltd (SHCIL) and
  • the authorised stock exchanges either directly or through their agents

The SGBs are held in the books of the RBI till the process of  dematerialization is done.


Key Benefits of Sovereign Gold Bond Scheme

  1. 2.5% interest per annum on the initial investment amount
  2. Redemption linked to Gold Price at the time of maturity
  3. No storage cost and no risks associated with holding physical gold
  4. No gold jewellery making charges
  5. Capital Gains are exempt from tax if held till maturity

We believe that global inflation is trending up and is at an all time high in some countries. In my opinion SGB is one of the best ways of adding gold to one’s portfolio. Low risk and liquidity of the SGB makes it an ideal investment option.


Namrata Singh is Certified Financial Planner with more than 13 years of experience in banking and wealth management. ([email protected])

Chaitali Shah, MCom & MA (Economics) was a Financial Economics – Faculty at Wilson College, Mumbai  ([email protected])

(Please note all views are personal)

Earlier article of this series: Senior Citizen Savings Scheme ; Salient Features explained

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