Discontinuation of Sovereign Gold Bond (SGB)

The Indian government has decided to discontinue the Sovereign Gold Bond (SGB) scheme due to its high borrowing costs. Finance Minister Nirmala Sitharaman confirmed this decision, stating that the government periodically reviews its borrowing strategies and found that SGBs incurred significant costs.

Despite allocating ₹18,500 crore for SGBs in the FY25 Budget, no new tranches have been issued in the current fiscal year. The last issuance was in February 2023, amounting to ₹8,008 crore. The SGB scheme was launched in November 2015 to reduce physical gold imports by offering a digital alternative.

The discontinuation of the SGB scheme means that no new bonds will be issued. However, existing SGB holders will continue to receive interest payments and can redeem their bonds upon maturity or as per redemption rules

Sovereign Gold Bond (SGB) Scheme: Key Features

• Launch Date: November 2015, aimed at reducing physical gold imports.
• Maturity Period: 8 years, with the option for early redemption after 5 years.
• Interest Rate: Initially set at 2.75%, later revised to 2.5% per annum.
• Redemption Price: Determined by the average closing price of 999 purity gold, as quoted by the India Bullion and Jewellers Association Ltd (IBJA).
• Last Issuance: February 2023.