Sovereign Gold Bonds (SGB) are issued by Reserve Bank on behalf of Government of India and are traded on Stock Exchanges. SGBs are government securities denominated in grams of gold.
Issuer: Reserve Bank on behalf of Government of India
Date of subscription – May 11,2020 û May 15, 2020
Why to invest in SGB:
▪ Bond carry sovereign guarantee both on redemption amount and on the interest.
▪ Avoids the hassles of physical delivery. The risk and cost of storage are eliminated.
▪SGB are also free from issues like making charges and purity in the case of gold in jewellery form.
▪The bond share held in the books of the RBI or in demat formeliminating risk of loss of scrip etc.
▪Available in demat and paper form.
▪Investors shall earnreturns linked to gold prices.
▪The Bonds bear interest at the rate of 2.50 per cent (fixed rate) per annum on the amount of initial investment.Interest will be credited semi-annually to the bank account of the investor andthe last interest will be payable on maturity along with the principal..
▪Offers liquidity through trading on stock exchanges for early/emergency exit.
▪Capital gains on redemption of SGB are not taxable to an individual.
Features of SGB
Product nameû Sovereign gold bond 2020-21 Tranche II.
- Eligibility – The Bonds will be restricted for sale to resident individuals, HUFs, Trusts, Universities and Charitable Institutions
- Denomination – The Bonds will be denominated in multiples of gram(s) of gold with a basic unit of 1gram.
- Tenor– The tenor of the bond is 8 years. Early encashment/redemptionof the bond is allowed after fifth year from the date of issue on coupon payment dates.
- Minimum/Maximum size – 1 gram of gold/4KG for individual & HUF and 20 kgs for trust and similar entities.
- Issue price – Average of closing price of gold of 999 purity, published by the IBJA for the last 3 working days of the week preceding the subscription period.
The issue price of the Gold Bonds will be Rs 50 per gram less for those who subscribe online and pay through digital mode
- Redemption price – The redemption price will be in Indian Rupees based on previous 3 working days simple average of closing price of gold of 999 purity published by IBJA.
- Interest rate – The investors will be compensated at a fixed rate of 2.50 per cent per annum payable semi-annually on the nominal value
- Collateral – Bonds can be used as collateral for loans. The loan-to value (LTV) ratio is to be set equal to ordinary gold loan mandated by the Reserve Bank from time to time
We request you to kindly get in touch with your Relationship Manager to subscribe or open an account with us.
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