Mutual Funds Allowed for Sovereign Gold Bonds

2019 ias preliminary exam test series

Bombay Stock Exachange has decided to permit mutual fund distributors to subscribe to sovereign gold bonds issue for their respective clients, through the bourse’s mutual fund platform.

Sovereign gold bond scheme (SGB) will be open for subscription on BSE StAR MF Platform from tomorrow September 1 to September 9, 2016 for mutual fund distributors (MFDs) to subscribe to the issue for their client.

BSE StAR Mutual Fund is the largest MF distributor platform in India.

The SGBs will be sold through banks, Stock Holding Corporation of India Limited (SHCIL), designated post offices and recognised stock exchanges — NSE and BSE.

As the government securities denominated in grams of gold, SGBs offer an alternative to holding gold in physical form.

The scheme was announced by the government on October 30 last year. To improve attractiveness of the scheme, new features were introduced in the fourth instalment, where the minimum subscription limit was brought down to 1 gm, from 2 gm.

The product earns an interest rate of 2.75 per cent per annum, payable half yearly on initial investment.

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