The Union government has decided to discontinue the Sovereign Gold Bond (SGB) scheme due to the high costs associated with borrowing. Finance Minister Nirmala Sitharaman confirmed this decision at a press briefing following the Union Budget announcement on February 1.

Launched in 2015 as part of the Gold Monetisation scheme to reduce gold imports, the SGB scheme became increasingly popular over time due to its government-backed nature.

The first tranche of the scheme offered returns ranging from 10.68% to 13.5%. The bonds were initially issued in November 2015 at a price of ₹2,684 per gram and were redeemed in November 2023.

Ajay Seth, the Economic Affairs Secretary, explained the reasoning behind the decision, noting that the SGB scheme was originally introduced to raise market funds and reduce gold imports. However, in recent years, it has become a relatively expensive borrowing method for the government. Despite a ₹18,500 crore allocation for SGBs in the FY25 Budget (down from ₹26,852 crore in the interim Budget), no new tranches of SGBs have been issued this fiscal year. The most recent issuance was in February 2023, amounting to ₹8,008 crore.