India eased the restrictions for its Sovereign Gold Bond Scheme after failing to secure the targeted investment, the government said on Wednesday.
India is the world`s second biggest consumer of the precious metal and meets almost all its demand from imports. In 2015, India`s government launched the bond scheme as an alternative to buying the metal and trimming the demand for physical gold.
The annual investment limit under the Scheme has been raised to 4 kilograms for individuals and 20 kgs for Trusts, the statement said. The previous limit was 500 grams.
"In view of the less than expected response of investors to the scheme, and considering its bearing on the current account deficit and consequently on the overall macro-economic health of the country, it was felt necessary to make changes in this scheme to make it a success," the statement said.
The scheme has attracted 47.69 billion rupees ($741 million) in the last two financial years to March 31, about a fifth of the targeted 250 billion rupees, the statement said.
The cabinet has also empowered the finance ministry to launch variants of Sovereign Gold Bonds with different interest rates, risk protection and pay-offs, to compete with alternative investments and deal with volatility in global gold prices.
($1 = 64.3350 Indian rupees)