Finance Ministry on Tuesday informed the Rajya Sabha that Sovereign Gold Bonds (SGBs) amounting to 130 tonnes of gold are to be redeemed from this fiscal. The Ministry simultaneously indicated that no more tranches of SGBs are to be expected henceforth.
In a written response, the Minister of State for Finance, Pankaj Chaudhary, said 67 tranches of SGBs have been issued till FY24-25 amounting to 146.96 tonnes of gold. “The outstanding value as on March 20, 2025 on issue price is ₹67,322 crore for 130 tonnes of gold. Redemption of SGBs is based on prevailing market price,” he said.
In order to divert people from physical gold to paper gold without requirement of import, the government had introduced SGBs in November 2015. With the maturity of 8 years, the bonds offered annual coupon rate of 2.75 per cent (later revised to 2.5 per cent) till the time of redemption. Gains at the end of 8 years is free from tax. Though pre-maturity redemption is permitted after 5 years, the gain is taxable in that period. The bond is part of government’s open market borrowings.
According to Chaudhary, the government has maintained a Gold Reserve Fund (GRF) in Public Account where price and interest differential amount is credited in time. SGBs, in addition to other borrowing instruments, have been an instrument for raising resources for financing fiscal deficit. However, in addition to these, SGBs also served the purpose of savings/financial instrument as an alternate to physical gold.
“Due to the recent gold price volatility and global economic headwinds, this form of borrowings has become relatively expensive. Therefore, based on maturing and deepening of Indian G-Sec market, which helped in mobilising relative low-cost borrowing, resources were not raised through SGBs in FY 2024-25,” he said. The last tranche of SGBs (FY23-24 Series IV) was issued on February 21, 2024 which will mature in February 2032.
