Sovereign Gold Bond scheme and Gold Monetization Scheme

In the year 2015, the government introduced Sovereign Gold Bond scheme as well as Gold Monetization
Scheme. These were aimed at bringing down the import of gold in physical form so that the outflow of
foreign currencies can be prevented.


Sovereign Gold Bond scheme-:
Sovereign Gold Bond scheme was introduced in order to bring down investment in gold in physical form.
Investment in gold in physical form suffers from some basic risks. First of all, the risk is related to the purity of gold in physical form. Secondly the risk is related to its safety. If it is kept in a locker, it will incur cost. If it is kept at home the risk involved will be high. Hence, investment in gold which is in the form of bond is always beneficial.

This scheme has following provisions -
1. The bond is issued in the form of paper and even in digital form by the RBI through the permission of Government of India.
2. It is issued with the face value of minimum 1 gram of gold and thereafter in multiple of that.
3. The bond will be considered as 99.99% pure gold.
4. The bond can be sold through the post offices and through commercial banks and even through the stock exchanges.
5. While buying the bond the applicable price will be the average price of physical gold during the last
three working days of the previous week.
6. If the bond is bought in cash, then maximum amount will be of 20,000 rupees or else in order to buy it with an amount which is more than that online payment or payment in the form of cheque etc.has to be done.
7. If online payment is done, on every gram of bond a discount of rupees 50 will be given.
8. An individual or a family can buy a minimum of 1 gram of gold bond and maximum of 4 kg gold bond in one financial year. A university or a trust can buy bond of minimum 1 gram of gold and maximum 20 kg of gold in one financial year.
9. The value of the bond will fluctuate along with the value of gold in physical form.
10. The bond will have a maturity period of 8 years, but it can be surrendered at any time after 5 years. In digital form the bond can be sold on stock exchanges any time after 15 days of being bought.
11. An interest of 2.5 % will be paid to the investor on the initial value of investment. Although it is annual rate of interest it will be divided into two parts and will be paid semi-annually.
12. The bond can be pledged by the buyer and he may borrow against it.
13. When the bond is surrendered or sold, capital gain tax will not be applicable on the profit . However,
the interest received is taxable. When it is surrendered the price applicable will be equal to the average price of gold in the physical form during the last three working days of the previous week.
14. Even the banks can show the sovereign gold bond as the part of their SLR.
15. The post offices and the banks which sell this bond will get a commission which is 1% of the value of the bond.
16. If the post offices or the banks use an agent in order to sell the bond, then 50% of that 1% will go to
the agent in the form of commission.

But it was seen with respect to India that investment in gold is done mainly through Black money. So this
scheme could not succeed as per expectations 



  Gold Monetization Scheme 
Gold Monetization scheme was aimed at ensuring that the requirement of gold in physical form is fulfilled
through domestic resources. In Indian households and temples more than 20,000 tons of surplus gold is
lying without use. Even after that India remains the largest importer of gold in the entire world. Hence,
Gold Monetization Scheme was aimed at ensuring availability of gold in the market through domestic
sources. Although the value of gold lying at home as well as in temples fluctuates along with the price of
gold in the market but there are no additional benefits associated with it. Gold Monetization Scheme not
only provides safety to the gold of the depositors but it also ensures additional benefit in the form of interest.



 Under this scheme an interested individual or a temple will have to open a gold monetization account with commercial banks. Gold can be deposited in every form, but it will be melted and converted into bars. A minimum of 30 gram of pure gold has to be deposited. There is no ceiling over the maximum quantity of gold deposited.

Under this scheme three different types of accounts can be opened.
1. With a maturity period of 1 year to 3 years
2. With a maturity period of 5 years to 7 years
2. With a maturity period of 12 years to 15 years
Under the first account, deposits will be considered as the liability of the bank or in other words it will be
considered as deposits of the bank. Hence the bank will have to maintain CRR and SLR over it. While
depositing the gold the depositors has to give it in written that on maturity, he wants back gold or cash.
Once it is given in written it cannot be changed. The gold will be valued at current price of the gold. Once
the bank receives the gold it can be sold to the jewelers and the money received can be used by the bank
in order to provide loan to the consumers. The depositors of gold will receive interest of approximately 2% annually. Even the interest can be received in the form of gold or cash. This also has to be given by the depositor in the written form.



The gold deposited in the second and third account will not be considered as a liability of the bank. Hence
the bank need not maintain CRR and SLR against it. In these two accounts the banks act only as mediator, the gold deposited is considered as the liability of the government. Hence the gold received by the banks under these two accounts will go to Metal and Mineral Trading Corporation (MMTC). It will be sold to the jewelers and the money will go to the government in the form of loan. In the account with the maturity period of 5 to 7 years the annual interest paid by the government to the depositors will be 2.25%.



In the account with the maturity period of 12 to 15 years the annual interest paid by the government will
be 2.50%. Even in the case of second and third account it will be taken in written from the deposited that on maturity whether he wants gold or money. This money which the government receives by the sale of gold ensure availability of loan to the government at extremely low interest rate and the gold sold in the
market ensure availability of gold in physical form without being imported.



Note:- In February 2021 Revamped Gold Monetization Scheme was started. Under this the minimum deposit limit of gold was reduced from earlier 30 grams to 10 grams. At least one third of public sector bank branches in all towns will have to provide revamped gold deposit scheme on demand with special
designated officers.......



Comments

Post a Comment

Popular posts from this blog

Uniform Civil Code (UCC) -

Image
The Law Commission of India has asked for views and proposals from the public regarding the UCC. The  UCC  has been a highly debated and politically charged issue  in India. The  Law Commission's  previous stance on the UCC was that  it was neither necessary nor desirable . UCC is a  proposal to replace the personal laws  of various religious communities with a common set of laws for all citizens. What is Uniform Civil Code? About: The Uniform Civil Code is  mentioned in Article 44 of the Indian Constitution,  which is part of the  Directive Principles of State Policy. These principles are  not legally enforceable but are meant to guide the state  in making policies. It has been supported by some as a way  to promote national integration and  gender justice , but opposed by others as a threat to religious freedom and diversity. The  only state in India that has a UCC is Goa,  which retained ...
Read more

Age of marriage men -women & Prohibition of child marriage act, 2006

Image
Recently, the Union Cabinet cleared a proposal to bring uniformity in the marriageable age of men and women. By amending the Prohibition of Child Marriage Act (PCMA), 2006 and other personal law, the legal age of marriage of women will be raised rom 18 to 21 years.The decision is based on the recommendation of a four-member task force led by former Samata Party chief Jaya Jaitly. Note: The task force was set up to re-examine the age of marriage and its correlation to health and social indices such as infant mortality, maternal mortality, and nutrition levels among mothers and children. Key Points About Legal Framework of Minimum Age for Marriage: In India, the minimum age of marriage was prescribed for the first time by the law known as the Sarda Act, 1929.  It was later renamed as the Child Marriage Restraint Act (CMRA), 1929.In 1978, the law was amended to raise the minimum age of marriage to 18 years for girls and 21 years for boys....
Read more

Sexual harassment of women

Image
. SEXUAL HARASSMENT Why in news? Recently, the Supreme Court took the cognizance of “serious lapses” and “uncertainty” in the implementation of the Protection of Women from Sexual Harassment (PoSH) Act, 2013. More on the news • The cognizance came in the backdrop of a newspaper survey revealing only 16 out of 30 national sports federations in the country had constituted Internal Complaints Committees (ICC) mandated under the 2013 Act. About Sexual harassment at workplace • Cost of Sexual harassment at workplace  Individuals: Psychological suffering; behavioral change like isolation; Stress-related physical and mental illness; and Professional losses like foregoing career opportunities.  Employers/Enterprises: Low productivity, Hindered progress and innovation, Poor image of company, etc.  Society: Women’s undermined access to high-status; Legal and criminal justice expenses; Long term rehabilitation costs; etc. • Sexual Harassment of Women at Workplace (...
Read more

MANIPUR ISSUE

Image
Why in news? A horrifying video has gone viral on social media in which two women from the kuki-zomi community being paraded naked and sexualy assaulted by a mob in manipur.who this incident is a shameful act for any civilised society. The fire in manipur was lit in early May, when violence between miteis and kukis flared. Since then, over a hundred people have died and property, including a large number of churches, destroyed.  Thousands have had to flee their homes and many continue to live in releaf camps.        The main issue In manipur: The issue in manipur pertains to the long-standing demand for greater autonomy and protection of the right of several ethnic communities in the state. Manipur has a complex socio-political landscape with various ethnic groups, including the meiteis, Nagas, kukis and others, each with their own aspirations and demands.  Some of the major issues in manipur include:  1.Inner line permit (ILP):...
Read more

TOP 7 TEMPLES IN UNESCO IN INDIA:-

Image
Top 7 temple in UNESCO in india :-     Here are the top 7 UNESCO World Heritage sites in india that are temples, along with their image: 1. Brihadeeswarar Temple, Tamil Nadu: -Built in the 11th century, it is the world's first      complete granite temple. It represents the chola Dynasty's architecture brilliance. 2. Khajuraho group of Monuments madhya pradesh:    Known for its exquisite sculpture and intricate artwork depicting various aspects of human life, love,and spirituality. It showcases the architectural brilliance of the chandela dynasty.  3. Konark sun Temple, odisa:     Dedicated to the sun God, Surya, it is designed in shape of a colossal chariot carrying the sun God. In intricate stone carvings and architectural grandeur make it a prominent UNESCO site. 4: Group of Monuments at Hampi, Karnataka:    Hampi was the capital of Vijaynagara empire,and the a...
Read more

Mission chandrayaan 3 / mission moon

Image
What is Chandrayaan 3? Chandrayaan 3  spacecraft is the 3 rd  lunar exploration expedition, outlined by the  Indian Space Research Organisation (ISRO) . ISRO planned this spacecraft to exhibit India’s soft landing proficiency on a stellar body. It will only consist of a rover and lander and will communicate to the earth via an orbiter from Chandrayaan 2. This ambitious mission encompasses several configurations, integration and cognisance. Additionally, there are several other detailed testing remaining to evaluate the spacecraft. Background of Chandrayaan 3 Mission ISRO designed the Chandrayaan 2 mission to send the Chandrayaan 2 spacecraft with an orbiter, rover and lander. They launched this spacecraft on-board the  GSLV-Mk 3 , one of the mightiest geosynchronous vehicles. The lander Vikram’s failure on a soft landing resulted in hindering the attempt of rover Pragyaan to travel on the Moon. This led to endeavouring another mission to showcase India’s ...
Read more

NATO ( North Atlantic Treaty Organization)

Image
What is NATO ? NATO, or the North Atlantic Treaty Organization, is an intergovernment military alliance formed in 1949. Its primary purpose is promot collective defense, security,and cooperation among Its member countries.  NATO's purpose -: The main objectives of NATO are:- 1. Collective Defense:-   member countries one committed to the principle of collective defense meaning that an attack on one member is considered an attack on all.this serves as a deterrent and promotes stability in the alliance region.  2. Crisis Management:-  NATO plays a role in Crisis management and conflict resolution by providing political support, cooperation and military capabilities when necessary.  3. Cooperative security:- NATO aims to faster dialogue, cooperation and partnerships with other countries and international organizations to address common challenges such as terrorism, proliferation of weapons of mass destruction, and cyber threats. How many country in NATO...
Read more