The Sovereign Gold Bond Scheme introduced by the Modi government, which provides an opportunity to purchase gold at a discounted price, has emerged as a resounding success.
Investors participating in the scheme have witnessed their investments double in just five years, offering substantial returns.
The Sovereign Gold Bond Scheme, issued by the Reserve Bank of India (RBI), allows individuals to buy gold in units similar to mutual funds, providing an economical alternative to purchasing gold from the market.
While the maturity period of the scheme is eight years, investors have the option to withdraw after five years.
Examining the past five years, during the first phase of the Sovereign Gold Bond Scheme in May 2017-18, investors purchased gold bonds at a fixed price of Rs 2,901 per gram.
Presently, the price has surged to Rs 6,115 per gram, indicating a more than twofold increase in investors’ initial investment.
Impressive 110% Returns in Five Years
Over the course of five years, investors have witnessed remarkable returns of 110% under the gold bond scheme.
Recognizing the profitability of the scheme, investors have shown a preference for retaining their investment rather than opting for withdrawal.
Despite the completion of the pre-withdrawal period for 21 out of the total 62 issuances, investors perceive their investment as a more lucrative deal.
The Sovereign Gold Bond Scheme enables payments through cash, demand drafts, or net banking, offering the convenience of purchasing digital gold instead of physical gold.
The scheme, backed by a government guarantee, is periodically issued by the Reserve Bank of India, with terms and conditions varying with each issuance.
Investment Flexibility and Benefits
Under the scheme, investors have the option to invest in as little as one gram of gold, with a maximum limit of four kilograms for individuals and 20 kilograms for Hindu undivided families and trusts within a financial year.
The purchase of Sovereign Gold Bonds is facilitated through banks, Stock Holding Corporation of India Limited, nominated post offices, and recognized exchanges.
The scheme offers an annual interest rate of 2.50% on the initial investment, disbursed to investors’ accounts every six months.
Additionally, a discount of Rs 50 per gram is provided for online payments. While the interest received on the gold bonds is taxable, no tax is applicable on the capital gains resulting from their redemption.
Due to these benefits, the Sovereign Gold Bond Scheme has gained immense popularity among the people.
In the financial year 2021, investments in the scheme reached a record high of 32 tonnes, and in the previous financial year, purchases equivalent to 27 tonnes were made, showcasing the scheme’s enduring appeal.
In conclusion, the Sovereign Gold Bond Scheme, introduced by the Modi government, has garnered significant success, with investments doubling in just five years.
This affordable and secure alternative to purchasing gold from the market has attracted investors seeking handsome returns and has remained popular due to its flexibility and tax advantages.
