Gold Bonds are coming back..!? Several options in new project..!?

Late Finance minister Arun Jaitley announced the gold Bond Scheme (SGB) in his second budget (2015). Instead of buying gold in metal, it is to buy it in paper form. The Modi government brought this scheme with the aim of reducing gold imports. This scheme has been well received by the people so far. The last gold bond issue was in february 2024. The gold bond issue began on the 12th of that month and was completed on the 16th. The bond issue was at a price of Rs. 6,262 per gram. After that, no gold bond issue has been held till now. Meanwhile, the government reduced the gold import duty in the last budget. Due to this, there are speculations that the central government has unofficially canceled the gold bond scheme.
In this situation, it is said that the government is likely to announce a new scheme in the upcoming budget as an alternative to the gold bond scheme. Col sanjeev Kovil, CEO of financial advisory firm Hum Bhowji Initiatives, said that the gold bond scheme offers investors a tax-efficient and risk-free way to invest in gold. This dual benefit makes it impossible to stop the scheme without a strong alternative. Stopping the gold bond scheme will push investors to invest in metallic gold. Instead of completely eliminating the gold bond scheme, the government can refine the scheme. gold bonds can be issued targeting specific demographic groups such as women and rural investors. gold bonds can be issued at lower denominations to make them accessible to a larger audience. He said that bonds should be issued only digitally to reduce operational costs and promote financial services. Narinder Wadhwa, Managing Director, SKI Capital, said that if the government decides to stop the issuance of gold bonds, a new scheme can be introduced to ensure that the benefits offered by the scheme are not lost. Most likely, the 2025 Budget may bring changes to the gold bond scheme or come up with suitable schemes to maintain the pace of gold monetization.

 Sourav Ghosh, co-founder of online securities platform Giraffe, said that in the absence of new gold bond issues, investors may explore alternatives. anand K. Rathi, co-founder of Powered By Mirae Money, said that the gold bond scheme was an expensive measure taken to reduce gold imports. The government hoped that if the scheme was implemented, the price of gold would remain stable. But the price has increased and the government has faced unexpected challenges. Considering the financial challenges and the potential loss associated with the gold bond scheme, the feasibility of issuing gold bonds is questionable. Akshay Sinhalkar, head of research, at Axis Securities, said that in the 2025 Budget, there are several options to introduce as an alternative to the gold bond scheme. This includes more aggressive promotion of gold-based wallet PLATFORM' target='_blank' title='digital-Latest Updates, Photos, Videos are a click away, CLICK NOW'>digital products, gold mutual funds, and ETFs, and the introduction of gold savings schemes that can offer tax and diversification benefits to investors, he said.
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Sowmiya Sriram

30/01/2025 12:08 PM