If you are planning to invest in gold through Sovereign Gold Bonds, gold funds or gold ETFs, IDBI Bank gives you all these options and more. In addition to that, there is also the IDBI gold loan scheme that you can opt for in case you want to pledge any gold you have in your possession in exchange for a loan.
Before you go ahead and make a financial decision, you need to first get to know the many IDBI gold loan schemes and investment options available. Here are some of them.
The IDBI gold loan scheme gives assistance to farmers who are in need of funds to meet their cultivation requirements, to self-employed people who need to fund their business needs, and to traders and distributors who have any medical emergencies or other expenses to take care of. You can pledge any gold ornaments or other forms of physical gold in exchange for borrowed funds.
The minimum amount you can borrow is Rs. 10,000 and the maximum amount is Rs. 20 lakhs. The repayment tenure ranges from 3 months to 12 months. And the IDBI gold loan interest rate is also very nominal, making it easy for borrowers to repay the funds.
If you want a safer way to invest in gold for the medium term or the long term, you can also invest in IDBI Sovereign Gold Bonds. These bonds are issued by the Reserve Bank of India on behalf of the Indian government, and they are denominated in multiples of grams of gold. The basic unit is 1 gram of gold.
IDBI Bank Sovereign Gold Bonds offer interest at the rate of 2.5% per annum payable on the nominal value of the bond, and they come with a tenure of 8 years. Premature exits are allowed from the fifth year onward.
In addition to the IDBI Bank gold loan scheme and the IDBI gold bonds detailed above, you can also choose to invest in IDBI gold Exchange Traded Funds (ETFs). These are open ended funds that track the performance of gold and replicate it, so you can benefit from the price movements of the yellow metal. In other words, gold ETFs from IDBI allow you to passively invest in gold without the added burden of having to time the gold market. Gold Exchange Traded Funds have certain distinct features and benefits. You can take a closer look at these below.
Here are the main features of the IDBI Gold Exchange Traded Fund.
Gold ETFs are traded on the exchange, making buying and selling much easier.
IDBI gold ETFs are available for medium risk profiles as well as low to medium risk profiles.
Gold ETFs invest in physical gold and gold related instruments, as well as in debt and money market instruments.
IDBI gold ETFs do not come with any entry load or exit load.
The benchmark is the domestic price of physical gold.
Investing in gold ETFs offered by IDBI comes with many benefits for the investor. Here are the top advantages.
Since ETFs are traded in dematerialized formats, the risk associated with holding physical gold is eliminated.
Gold ETF units are backed by 24 carat gold of 99.5% purity, thereby ensuring that your investment is of top quality.
You can invest with even small amounts since it is possible to buy ETFs representing 1 gram of gold too.
Gold ETFs are highly liquid and can be bought and sold via exchange quickly.
The IDBI gold fund allows you to invest in gold through a Systematic Investment Plan (SIP). The key objective of the IDBI gold fund is to generate returns that closely correspond to the returns offered by the IDBI Gold ETF. So, the gold fund also provides returns that are closely linked with the returns offered by the precious metal itself. Plus, it makes for a good long-term investment option if that is the investment horizon you are looking for.
Take a look at the main features of the IDBI gold fund.
The minimum amount needed to invest in the gold fund is Rs. 5,000.
The minimum additional investment that can be made in the fund is Rs. 1,000.
If you wish to invest in this fund through a Systematic Investment Plan (SIP), the minimum investment amount is Rs. 500.
The minimum amount of withdrawal permitted is Rs. 1,000.
Exit load is applicable at 1% of the redemption amount if made within 365 days.
The IDBI gold fund offers a wide range of advantages for the investor. Here are some ways in which you can benefit if you invest in the gold fund offered by IDBI.
Since the fund aims to offer returns that are in tandem with the returns generated by the IDBI Gold Exchange Traded Fund, you can rest assured that you do not need to time the market closely.
Since investing in the IDBI gold fund is an entirely digital process, there is no need to hold gold physically. This eliminates the risk associated with handling the yellow metal in its physical form, and ensures that your investments are highly secure.
You can invest in the IDBI gold fund through an SIP on a monthly or quarterly basis. This adds a layer of convenience and customization to your investment plan.
Both direct and regular investment plans are available. You can choose the one that best meets your financial goals.
No, the two are quite different. Gold ETFs are exchange traded funds that track the domestic price of physical gold and are traded on the exchange. Gold funds are mutual funds that invest in gold ETFs and other assets.
Short-term capital gains from gold ETFs are taxed as per your income slab rate, while long-term capital gains are taxed at the rate of 20% with indexation.
Yes, you can avail a loan from IDBI by pledging any physical gold you have in your possession. You can borrow amounts ranging from Rs. 10,000 to Rs. 20 lakhs, and repay the loan over tenures ranging from 3 months to 12 months.