The Complex World of Sovereign Gold Bonds: A Financial Instrument Evolution

The Indian government has issued 67 series of Sovereign Gold Bonds, amounting to 146.96 tonnes of gold, to address fiscal deficits. Due to economic shifts, borrowing through SGBs has become costly. Meanwhile, under the Pradhan Mantri Mudra Yojana, over 52.07 crore loans have been sanctioned with a 2.21% NPA rate.

The Indian government has released 67 tranches of Sovereign Gold Bonds (SGBs), totaling 146.96 tonnes of gold, until the fiscal year 2024-25, as announced to Parliament recently.

On March 20, 2025, the outstanding value set at the issue price is reported to be Rs 67,322 crore for 130 tonnes of gold, disclosed Minister of State for Finance Pankaj Chaudhary.

Chaudhary revealed that redemption prices are tethered to the current market rate and highlighted the role of the Gold Reserve Fund in managing price and interest differentials promptly.

SGBs, along with other instruments, have historically been used to finance fiscal deficits while serving as savings alternatives to physical gold.

The recent price volatility and broader economic challenges have increased the cost of SGB borrowings, resulting in no SGB issuance for FY 2024-25.

Separately, over 52.07 crore loans have been issued under the Pradhan Mantri Mudra Yojana, with a noted 2.21% average for non-performing assets up to December 2024, as per data from Member Lending Institutions.

(With inputs from agencies.)