Why Do Govt, RBI Encourage You To Invest In Sovereign Gold Bond Scheme?
The latest price for subscribing to the Sovereign Gold Bond (SGB) is Rs 5,923 per gram. You can subscribe to it from today!
The subscription window for the SGB Series II of 2023-24 opened on September 11, 2023, and it’s going to be open till September 15, 2023. So, if you’re thinking about investing in gold, this is your chance.
Now, let’s talk about why the Indian government and the Reserve Bank of India (RBI) are all too conscious about this Sovereign Gold Bond thing. There are several great reasons behind the SGB scheme.
First, it’s all about reducing the demand for physical gold. India loves gold, and we’re one of the biggest consumers of it in the world. But importing all that gold costs us a lot of foreign exchange.
So, the government wants to shift people’s approach towards investing in these bonds instead of buying physical gold. It’s a win-win – you get gold exposure, and the country saves some precious foreign exchange.
The government & its bodies including RBI, want to offer its citizens a safe and liquid way to invest in gold. These bonds are backed by the Indian government, so they’re pretty safe. Plus, you can sell them easily on the stock market if you need to cash in.
In addition to that, you get an interest rate of 2.5% per year on your investment. The interest gets credited to your bank account twice a year. Of course, it’s taxable under the Income Tax Act, but it’s still a nice little bonus.
How Is SGB Beneficial For Govt, RBI & Indians?
People, that’s you and me, get a bunch of perks. No impurities in these bonds – they’re pure gold at 99.9% purity.
Plus, no capital gains tax if you hold onto them until maturity, which is 8 years. And there are no making charges or GST or taxes unlike buying physical gold.
These bonds can be collateral for loans, tradable on stock exchanges, and you get the prevailing market price of gold when you cash them in. You can even hold them in demat form, which is safer than physical gold.
Now, for RBI, they get to improve their risk management. They can buy these bonds when gold prices are low and sell them when prices are high, kind of like a smart investment strategy. It helps them protect their finances.
The government also takes benefits from the Sovereign Gold Bond scheme. They raise money through these bonds for various projects and programs. So, they’re like a funding source. Plus, they cut down on the import bill for physical gold, saving more money.
Can SGB Impact People’s Mindset Towards Investments in Gold?
These bonds might just change how people think about investing in gold. Instead of hoarding physical gold, they might start seeing these bonds as a more convenient and lucrative option.
With the interest rate and tax benefits, SGBs offer a better deal compared to traditional forms of gold investment. So, people might shift from the “buy and keep” mentality to a more “invest and earn” mindset.
How Will SGB Impact On The Indian Economy?
Now, let’s look at the bigger picture – how SGBs can potentially boost the Indian economy.
The Sovereign Gold Bond scheme reduces our dependence on importing physical gold, which saves precious foreign exchange reserves. This is crucial for the country’s economic stability.
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Secondly, the funds raised through SGBs can be used for important government initiatives and projects, which can stimulate economic growth. It’s like a financial boost for the nation.
The SGB scheme also promotes financial literacy by encouraging people to invest in financial products. This can improve overall financial well-being and stability in the country.
So I would say, SGBs aren’t just pieces of paper; they’re a gold mine of benefits for everyone involved – from common people (like you & me) to the government as well as the Reserve Bank of India (RBI).
They have the potential to change how we Indians look at gold as an investment. It’s the gold, but a smarter and better approach.