Sovereign gold bond scheme

IN NEWS:

• The government has decided to issue Sovereign Gold Bonds (SGBs) in six tranches beginning April 20.

SOVEREIGN GOLD BONDS:

• SGBs are government securities denominated in grams of gold. They are substitutes for holding physical gold.
• The scheme was launched in November 2015 with an objective to reduce the demand for physical gold and shift a part of the domestic savings used for the purchase of gold into financial savings.
• The Bond is issued by Reserve Bank of India on behalf of Government of India.
• Individuals, Hindu Undivided Families (HUFs), Trusts, Universities, and Charitable Institutions are eligible for purchase of the bonds.
• The Bonds are denominated in the multiples of gram(s) of gold with a basic unit of 1 gram. Investors have to pay the issue price in cash and the bonds will be redeemed in cash on maturity.
• The bonds are tradable in the stock exchanges and can be used as collateral for loans.

PRELIMS QUESTION:

Q. Consider the following statements regarding the Sovereign Gold Bond Scheme:  

1. It was launched to reduce the demand for physical gold
2. The bonds can be used as collateral for loans
3. The bonds can be redeemed in gold upon maturity

Choose the correct statements from the codes given below:  

1. 1 and 2 only
2. 2 and 3 only
3. 1 and 3 only
4. All of the above

Answer to Prelims question