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When Gold Investments Act Like Fixed Deposits (FDs) In State Bank Of India (SBI)
07 Nov 2018, 01:18 PM IST 
Diwali 2018: SBI allows you to receive simple interest annually or cumulative interest on maturity.
- The purpose of SBI's R- GDS is to mobilize idle gold in the country and put it into productive use, said the lender's website sbi.co.in. The scheme aims to provide customers an opportunity to earn interest income on their idle gold holdings.
- Individuals, singly or jointly (as former or survivor), proprietorship and partnership firms, hindu undivided families (HUFs), trusts including mutual funds/exchange-traded funds registered under SEBI (Mutual Fund) Regulations, and companies can invest under SBI's R- GDS.
- While you need to invest a minimum of 30 gram (gross) gold, there is no maximum limit on the investment, SBI said.
- SBI offers three types of deposits under this scheme: 1) Short Term Bank Deposit (STBD): Tenure 1 to 3 years 2) Medium Term Government Deposit (MTGD): Tenure: 5-7 years. The deposit will be accepted by SBI on behalf of the Central Government. 3) Long Term Government Deposit (LTGD): Tenure 12-15 years. The deposit will be accepted by SBI on behalf of the Central Government.
- Under Short Term Bank Deposit of physical gold, the current interest rates are: 0.50 per cent per annum for one year; 0.55 per cent per annum above one year-up to two years; and 0.60 per cent per annum above 2 years-up to 3 years. Under Medium Term Government Deposit, interest paid is 2.25 per cent per annum. Under Long Term Government Deposit, interest paid is 2.5 per cent per annum.
- SBI allows the depositor the option to receive payment of simple interest annually or cumulative interest (compounding annually) on maturity. The option is to be exercised at the time of deposit.
- Under Short Term Bank Deposit, non-cumulative interest is paid on 31st March every year and cumulative interest is paid on maturity. The principal and interest on STBD shall be denominated in gold. On maturity, interest for the broken period will also be paid, said SBI.
- In the case of Medium Term Government Deposit & Long Term Government Deposit, the principal is denominated in gold. However, the interest is paid in rupees annually on 31st March/ cumulative interest is paid on maturity. Broken period interest is paid at the time of maturity. Interest is calculated on gold value in rupees, at the time of deposit, said SBI.
- Interest on deposits under the scheme will start accruing from the date of conversion of gold deposited into tradable gold bars after refinement or 30 days after the receipt of gold whichever is earlier.
- Raw gold i.e. gold bars, coins, jewellery excluding stones and other metals are accepted. Customers need to submit application form, identification and address proofs and inventory form to SBI.