Sovereign Gold Bond Scheme Ends! FM Nirmala Sitharaman Confirms

Finance Minister Nirmala Sitharaman has indicated that the government is likely to discontinue the Sovereign Gold Bond (SGB) scheme. In a post-Budget conference on February 1, 2025, when asked if this marks the end of the scheme, she responded, "Yes, in a way."

Economic Affairs Secretary Ajay Seth elaborated, stating that recent experiences have shown SGBs to be a relatively high-cost borrowing method for the government. Consequently, the government has decided not to pursue this avenue further. 6 months back Dimer @Kaal_Raatri reported that Sovereign Gold Bonds (SGB) might end/scaled down as import duty was reduced to 6%!

The SGB scheme was introduced in 2015 as a means to provide investors with an alternative to physical gold. It gave 9-11% returns per annum, plus an interest of 2.5%! However, due to the associated costs and complexities, the government is now considering discontinuing the issuance of new bonds.

As of now, no new SGBs have been issued in the current financial year, despite an allocation of ₹18,500 crore in the budget. This suggests that the discontinuation may take effect in the 2025-26 fiscal year.

Investors who currently hold SGBs will continue to earn interest until their bonds mature. The government has not yet provided specific details regarding the handling of existing bonds following the discontinuation of new issuances.

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