NSE to start gold bond trading

Trading in the sovereign gold bond will commence on the National Stock Exchange (NSE) of India’s platform from Monday in the cash segment.

The Reserve Bank of India and SEBI had cleared the trading in the new instrument recently. The launch in the cash segment will ensure ease of trading, wider reach, no additional procedure for regular investor to buy and sell through the exchange, NSE said.

The Sovereign Gold Bond Scheme, 2015 was announced by the Government of India in October 2015. The first tranche will now be available for trading. RBI has appointed NSE as ‘Receiving Office’ for collecting subscription bids from investors, NSE said.

Minimum investment size in the secondary market will be 1 gram. Reference price for trading will be the gold with 0.999 purity and as published by India Bullion and Jewellers Association (IBJA). The tenor of the bond is eight-years with a put option available from the fifth year, the exchange said.

The product is accompanied with few beneficial tax features. Though the long-term capital gains tax is applicable after three years, the same will be zero if redeemed after full maturity only. Investors will also not have to pay any TDS on interest accrued. Besides, the investment can also be used as collateral for bank loans, NSE added.

“NSE is expecting large retail acceptance as this product is a better substitute for physical gold. We expect the product to work well keeping in mind NSE’s retail distribution capabilities,” NSE Strategic Business Head (Currency and Fixed Income) Huzan Mistry said.