Sovereign Gold Bond Scheme:- On Monday, June 20, 2023, the government-run Sovereign Gold Bond Scheme 2023 opened for subscription. It was the fourth tranche of the government. As per the schedule for the gold bond scheme for the Reserve Bank of India (RBI), in the year 2021-22, the fourth tranche window shall open for investors from 12th of July to 16th of July – for a five-day period.
Individuals who live in the country, universities, Hindu Undivided Families trusts, and charitable organizations can invest in the interest-paying gold bonds.
Table of Contents
What is Sovereign Gold Bond Scheme?
The Sovereign Gold Bond Scheme, which offers gold-linked returns, was launched in 2015 alongside the Gold Monetisation Scheme. Gold bonds, according to wealth planners, are a safer and more effective way to invest in non-physical gold.
Under Sovereign Gold Bond Scheme, Sovereign Gold Bonds will be issued at a price of ₹ 4,777 per unit. On Monday, May 17, the government’s Sovereign Gold Bonds Scheme 2021-22, which will be issued in six tranches this fiscal year, opened for subscription with its first tranche. According to the Ministry of Finance, the subscription for the first tranche will close on May 21, 2021, and will be open to investors for five days. As part of the sovereign gold bond scheme, the Reserve Bank of India issues interest-paying bonds linked to the market price of the yellow metal.
Sovereign Gold Bond Scheme 2023 Premature Redemption Dates
Key Dates of Sovereign Gold Bond Scheme
Following are the important dates of the scheme:
|Tranche||Date of Subscription||Date of Issuance|
|2021-22 Series I||May 17-21, 2021||May 25, 2021|
|2021-22 Series II||May 24-28, 2021||June 1, 2021|
|2021-22 Series III||May 31-June 4, 2021||June 8, 2021|
|2021-22 Series IV||June 12-16, 2021||June 20, 2021|
|2021-22 Series V||August 9-13, 2021||August 17, 2021|
|2021-22 Series VI||August 30-September 3, 2021||September 7, 2021|
Issue Price of Gold Bond Scheme
For the first tranche of the gold bond scheme (2022)
According to the RBI, an issue price of 4,777 per unit shall be applicable. This issue price is equivalent to the value of one gram of gold.
Also, the rate is considered using spot prices provided by the Mumbai-based IBJA (India Bullion and Jewelers Association).
Discount in Gold Bond Scheme
For those who invest in gold bonds online, a 50 per unit discount is available, and payment for the application is made via digital modes. The issue price of gold for such investors will be ₹4,727 per gram of gold.
How to Invest in Gold Bond Scheme
Sovereign gold bonds are sold through designated post offices, recognized stock exchanges such as the National Stock Exchange of India, and the Bombay Stock Exchange Limited as well as the Stock Holding Corporation of India Limited. The gold bonds are held on the books of the RBI or in a Demat form.
Eligibility Criteria to Invest
To invest in Gold Bond Scheme, the following are eligible:
- Hindu Undivided Families or HUFs.
- Universities and
- Charitable institutions are all eligible to participate in the gold bond scheme.
Sovereign Gold Bond Scheme Advantages
- Gold bonds are a form of security as they were issued by the government of India stock.
- These goals can also be used as collateral for loans.
- Applicant can convert their bonds into Demat.
- Applicants can pray for their bonds through cash up to a limit of 20000 or demand draft, cheque or through e-banking.
- Interest earned on 20 gold bonds are taxable as they are under the provision of the Income Tax Act, 1961.
- There are no making charges or issues related to purity.
- Cost and risk of storage are eliminated under these gold bonds.
Government securities that are denominated in grams of gold are what the SGBs are. SGB’sare a sort of substitute for physical gold. Investors must pay the issue price in cash, and the bonds must be redeemed in cash when they reach maturity. The Reserve Bank of India issues the bond on behalf of the Indian Government.
The SGB is a superior alternative to physically holding gold. Since the investor receives the current market price at the time of redemption/premature redemption, hence the amount of gold paid for by the investor is protected. Storage risks and costs are eliminated. Investors are guaranteed the market value of gold at maturity as well as periodic interest. In the case of gold in jewelry form, SGB is free of issues such as making charges and purity. The bonds are held in the RBI’s books or in Demat form, removing the risk of scrip loss, etc.
Actually, there is a risk of capital loss in case the market price of gold falls,. However, the investor does not lose the gold units that he has paid for.
Persons residing in India as defined by the Foreign Exchange Management Act of 1999 can invest in SGB. Individuals, HUFs, trusts, universities, and charitable institutions are all eligible investors. If an individual investor changes his residential status from resident to non-resident then he may continue to hold SGB until he is redeemed/mature.
Yes, joint ownership is permitted.
In the case of a minor, the minor’s guardian must file the application on his or her behalf.
The issuing banks/SHCIL offices/designated Post Offices/agents will responsible for providing the application forms. It is also available for download from the RBI’s website. Banks may also offer an online facility to fill-up the form.
An investor cannot subscribe to the Sovereign Gold Bond with more than one investor ID. Investors can only have one unique investor Id associated with any of the prescribed identification documents. The one-of-a-kind investor ID must be used for all subsequent investments in the scheme. The quoting of PAN in the application form is required for holding securities in dematerialized form.
Yes, each family member can purchase bonds in his or her own name if they meet the eligibility criteria as described above.
The Bonds are issued in one-gram gold denominations and multiples thereof. The least investment in the Bond is kept as one gram with:
A maximum subscription limit of four kilograms for individuals.
Four kilograms for Hindu Undivided Families (HUF), and
Twenty kilograms for trusts and similar entities as notified by the government from time to time per fiscal year (April – March).
In the case of joint ownership, the limit only applies to the first applicant. The annual ceiling will include:
Bonds subscribed for in various tranches during the government’s initial issuance and
Those purchased in the secondary market.
Banks and other financial institutions’ holdings as collateral will be excluded from the investment cap.
Interest will be credited semi-annually to the investor’s bank account. The Bonds on the initial investment pay interest at a fixed rate of 2.50 percent per year. The final interest shall be payable along with the principal on maturity.
An investor/trust can purchase 4 kg/20 kg of gold each year. The limit is set on a fiscal year basis (April-March).
In the event of a joint holding for that specific application, the maximum limit will apply to the first applicant.
The customer will receive the allotment if he or she meets the eligibility criteria, provides a valid identification document, and pays the application fee on time.
Bonds are sold in many ways like:
Branches of Nationalized Banks
Scheduled Foreign Banks
Stock Holding Corporation of India Ltd. (SHCIL)
Scheduled Private Banks
Designated Post Offices and authorized stock exchanges.
Customers will receive a Certificate of Holding on the date the SGB is issued.
The price at which the bonds are sold is determined by the simple average of the closing price of 999 purity gold for the last three business days of the week preceding the subscription period. This closing price is published by the India Bullion and Jewelers Association Limited.
At the time of purchasing the bond, the bank account which was provided at that time shall be credited with the interest and redemption proceeds.
The Gold Bonds will be redeemed in Indian Rupees at maturity. The redemption price shall be based on the simple average of the closing price of gold of 999 purity. This closing price will be previous three business days and also this closing price is published by the India Bullion and Jewelers Association Limited from the date of repayment.
One month before maturity, the investor will be notified of the bond’s upcoming maturity.
The maturity proceeds will be credited to the bank account as per the information on file on the maturity date.
If any details, such as account numbers or email addresses, change, the investor must notify the bank/SHCIL/PO immediately.
Despite the bond’s 8-year term, early encashment/redemption is permitted after the fifth year from the date of issue on coupon payment dates. If the bond is held in Demat form, it will be tradable on exchanges. It is also transferable to any other qualified investor.
The bond can be given/transferred to a relative/friend/anyone who meets the eligibility requirements as mentioned above. The Bonds shall be transferable prior to maturity depending on the provisions of the Government Securities Act 2006 and the Government Securities Regulations 2007 by execution of an instrument of transfer available to the issuing agents.
TDS does not apply to the bond as it is the bond holder’s responsibility to comply with tax laws.
Yes, these securities can be used as financial institutions, collateral for banks, and non-banking financial company loans (NBFC).
The loan-to-value ratio will be the same as that prescribed by the RBI for ordinary gold loans from time to time. Loans against SGBs would not be inferred as a matter of right as it would be subject to the bank’s/financing agency’s discretion.
Other customer services such as early redemption, change of address, nomination, grievance redressal, transfer applications, and so on will be provided by the issuing banks/SHCIL offices/Post Offices/Designated stock exchanges/agents through which these securities were purchased.
Payment can be made in cash (up to 20,000 Rupees), cheques, demand drafts, or electronic funds transfers.
As per the provisions of the Government Securities Act of 2006 and the Government Securities Regulations of 2007, a nomination form is available along with the application form. An individual non-resident Indian may have the security transferred into his name as the nominee of a deceased investor if the following conditions are met:
The non-resident investor must hold the security until it is redeemed early or matures; and
The investment’s interest and maturity proceeds are not repatriable.
The bonds shall be made available for trading on a date when RBI will announce it. (It should be noted that only bonds held in de-mat form with depositories are eligible for trading on stock exchanges.) The bonds can also be sold and transferred in accordance with the provisions of the Government Securities Act of 2006. Bonds can also be transferred in parts.
The bonds shall be held in the RBI’s books. This bond is kept till the dematerialization process is completed. It is possible to keep bonds in a Demat account. A specific request must be made in the application form itself.
Following the allotment of the bond, the facility for conversion to demat will also be available.
Part holdings can be redeemed in increments of one gram.
The Reserve Bank of India has established a dedicated e-mail address to receive public inquiries about Sovereign Gold Bonds. Investors can send their questions to this email address.
In case of an investor’s death, the nominee or nominees to the bond can file a claim with the respective Receiving Office. The nominee/nominees’ claim will be recognized in accordance with the provisions of the Government Securities Act of 2006, as well as Chapter III of the Government Securities Regulations of 2007.
The executors or administrators of the deceased holder, or the holder of the succession certificate (issued under Part X of the Indian Succession Act), may submit a claim to the Receiving Offices/Depository in absence of a nomination. It should be noted that the aforementioned provisions also apply in the case of a deceased minor investor.