MUMBAI: Investors will now have one more choice to diversify their portfolio. For the first time, sovereign gold bonds would be available for trading on the National Stock Exchange of India’s (NSE) trading platform from Monday. The Reserve Bank of India (RBI) and Sebi have recently given their approval for trading in the new instrument, which would be launched on the cash segment of NSE.
Unlike the Gold Exchange Traded Funds (ETF), the advantage of investing in gold bonds is that the investor can earn interest at the rate of 2.75 per cent annually and such investment can also be used as collateral for availing bank loans.
Additionally, investors are not required to pay any tax deducted at sour-ce on interest accrued from such bonds. While long-term capital gains is applicable to both Gold ETFs and Gold bonds, investors in gold bonds would not be required to pay LTCG if the bonds are redeemed after maturity.
The tenor of the bond is 8 years with a put option available from the 5th year. The minimum investment size in the secondary market would be as low as one gram and the reference price for trading would be the gold with 0.999 purity. “NSE is expecting large retail acceptance as this product is a better substitute for phy-sical gold,” said Huzan Mistry, strategic business head, NSE.
