Why gold...when there is a golden 'bond'

Some 300 tonnes of gold is being sold in the country, annually. All this is being imported from abroad. The Centre aims to reduce these imports. It has introduced this plan, to divert the investments on solid gold, to that of gold bonds. Reserve Bank of India (RBI) is releasing the scheme, on behalf of the Centre. These bonds are authenticated by Indian Government. This chance is only for Indians living here, and not for Non-Resident Indians (NRIs). A person, can buy a minimum of one gram of gold and a maximum of 500 gm of gold, in a year. Bonds are available as demat accounts or certified on paper.

Gold bonds are available annually, only on certain days. Up till now, government has completed issuing eight rounds of gold bonds. It is making these bonds available, not at all times, but a few times in a year. The bonds are priced as per the market rate of gold, at the time of issue of the bonds. Gold bonds can be bought from commercial banks, Non-Banking Financial Corporation (NBFC) agencies and post offices. These bonds are available even with stock brokers. They are available online with banks and financial agencies. The term of bonds is eight years. At the end of five, six or seven years, there is a chance of withdrawing the investments. These bonds are traded in stock exchanges. They are sold and bought here. Because they are in demat form, if you need money urgently, you can sell them to others, by just transferring the bonds to their accounts. The bonds remain in demat form.

These bonds can be used as guarantee against loans. So you can take loans against them in an emergency. The rules set for gold loans, apply to loans against gold bonds. For those investing in gold, bonds are better than physical gold, experts suggest. The returns earned over the capital investments in these bonds, are not taxed. If you buy gold in the form of ornaments or biscuits, you need to protect them carefully. There is no safety at home. You need to rent a bank locker. But if you buy bonds, these kind of inconveniences can be avoided.

If gold prices increase, after buying the bonds, the difference in amount is paid. Also, an interest of 2.7 per cent is paid once in six months, over the amount invested in these bonds. Bonds can be bought not just by one individual, but by several people, jointly. These bonds can be given as a gift to others. It can also be transferred to others. Many modes of payment like cash, cheques, DDs or electronic exchange, are available to own these bonds. However, for cash payment, the amount to be invested is limited to Rs. 20,000. They can be taken in the name of children, under the supervision of a guardian or parents.

Know Your Customer (KYC) details are a must for taking gold bonds. Aadhar Card and Pan Card are enough to show as proof.

Centre certifies the investments as well as interests in these bonds. But gold rates depend on the market situation. If gold rates fall internationally, the value of bonds declines. Each investor should buy at least two gm worth of gold bonds.