Sovereign Gold Bond Scheme (SGB)
Introduction: Sovereign Gold Bond Scheme (SGB) was launched by Government of India in 2015. SGBs are government securities denominated in grams of gold. They are substitutes for holding physical gold. Investors have to pay the issue price in cash and the bonds will be redeemed in cash on maturity.
Who issues SGB?: The Bond is issued by Reserve Bank on behalf of Government of India.
Eligibility: Indian resident individuals, HUFs, Trusts, Universities and Charitable Institutions.
Tenor: The tenor of the Bond will be for a period of 8 years with exit option from 5th year to be exercised on the interest payment dates.
Denomination: multiples of gram(s) of gold with a basic unit of 1 gram.
Minimum Limit: 1 gram of gold
Maximum limit: 4 KG for individual, 4 Kg for HUF and 20 Kg for trusts
Issue price: Price of Bond will be fixed in Indian Rupees on the basis of simple average of closing price of gold of 999 purity published by the India Bullion and Jewellers Association Limited.
The issue price of the Gold Bonds will be ₹ 50 per gram less for those who subscribe online and pay through digital mode.
Interest rate: 2.50% p.a payable semiannually.
Who can sell SGB:
- Banks
- Stock Holding Corporation of India Limited (SHCIL),
- Designated post offices R
- recognised stock exchanges- NSE and BSE
Important One Liners
- SGB can be used as collateral for loans.
- Minor can invest in SGB. The application on behalf of the minor has to be made by his/her guardian.
- The Gold Bonds will be issued as Government of India Stocks under Government Securities Act, 2006.
- When an investors buys a SGB he/she is issued a Holding Certificate for the same. The Bonds are eligible for conversion into demat form.