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Can NRIs Invest in Gold Bonds?

ICICI Securities 02 Jan 2022 0 COMMENT

 

Gold is a good investment option. It is considered a safe-haven asset. Gold provides a solid cover during the time of rising inflation and unexpected market crashes. For non-resident Indians (NRIs), there are a few options for investing in gold. Physical gold, ETFs, and E-Gold are the primary ones.

Gold Bond Scheme

The Sovereign Gold Bond Scheme, launched by the Indian Government in 2015, is an attractive option for those who wish to avoid the hassle of safeguarding physical gold after investment in yellow metal. However, according to the Sovereign Gold Bond Scheme terms, only people residing in India can invest in the Gold Bonds as per Foreign Exchange Management Act, 1999.  

Besides them, HUFs, trusts, universities, and charitable institutions can invest in the Gold Bond. At the time of investment, the individual investor should be an Indian resident. They can subsequently change their residential status and become an NRI. In scenarios, the investor can hold the Gold Bond till early redemption/maturity.

The Sovereign Gold Bond Scheme allows nomination facility. An individual investor who is an Indian resident may appoint a non-resident Indian as their nominee. In that case, the NRI gets the security transferred to their name once the original investor passes away, provided that:

●   The Gold Bond Investment is held till early redemption or maturity

●   The redemption proceeds and interest from the investment does not get repatriated to India.

 

Additional Read: 10 Golden investment rules for first time earners

Is gold a good investment option for NRIs?

If you analyse the returns which gold has generated over the past few years, you notice that there are years when it had performed beyond expectations and times when it only fetched a small return.  Though gold may not generate a steady cash flow like stock, it is still a reliable asset you can lean on during economic uncertainty. It is beneficial in hedging your exposure during inflation.

Additional Read: Why Invest in Sovereign Gold Bonds?

Conclusion

Investment in the Sovereign Gold Bond Scheme is a limited option for NRIs. It is only possible if, at the time of the investment, the investor was an Indian resident. However, if you are an NRI who has been named as a nominee of the Gold Bond Investment, you can reap the benefits. Make sure to submit the necessary documents required for KYC compliance along with a copy of your passport.

Remember that gold supply worldwide is dwindling, so the earlier you start your investments in gold, the better are your chances.

Disclaimer:

ICICI Securities Ltd.( I-Sec). Registered office of I-Sec is at ICICI Securities Ltd. - ICICI Centre, H. T. Parekh Marg, Churchgate, Mumbai - 400020, India, Tel No : 022 - 2288 2460, 022 - 2288 2470.  I-Sec is acting as a distributor to solicit bond related products. All disputes with respect to the distribution activity, would not have access to Exchange investor redressal forum or Arbitration mechanism. The contents herein above shall not be considered as an invitation or persuasion to trade or invest.  I-Sec and affiliates accept no liabilities for any loss or damage of any kind arising out of any actions taken in reliance thereon. Investments in securities market are subject to market risks, read all the related documents carefully before investing. The contents herein mentioned are solely for informational and educational purpose.