After raising investment limit in Soveriegn Gold Bonds (SGBs) from the initial 500gms to 4kgs in a fiscal year, the government is constantly revising norms related to SGBs or Sovereign Gold Bond investment to make them more attractive investment option. In relation to the investment cap in SGBs, an official statement said that the limit is applicable for SGBs purchased from the secondary market. The investment ceiling shall not include SGB holdings that are kept with banks or other financial institutions as collateral.
Investment limit in SGB enhanced for retail customer, read more here.
For other entities including trusts, the investment limit in SGBs is kept at 20 kg as per government notification from time to time.
The SGB scheme was notified on 5 November 2015 by the centre mainly with the objective to bring forth a financial asset that can be an alternative to physical gold investment. The target was to shift funds from investment in physical gold and bullion estimated at roughly 300 tonnes on an yearly basis to investment into demat SGBs.
One of the official statements says, "SGBs will be available 'on tap'. Based on the consultation with NSE, BSE, banks and Department of Post, features of product to emulate 'on tap' sale would be finalised by Finance Ministry".
For different investor categories, the finance ministry has been allowed to come up with different SGB variants that offer different interest rates or pay-offs and risk protection.
As the government has failed to mobilise the targeted amount from the scheme since the time it is floated, higher investment limit and other changes are aimed at boosting the scheme.