Gold Bond Scheme To Open For Subscription On Monday: Interest Rate, Discount And Other Details

Gold Investment: Sovereign Gold Bonds (SGBs) are government-run bonds - issued by the RBI - denominated in multiples of one gram of gold.

Gold Bond Scheme To Open For Subscription On Monday: Interest Rate, Discount And Other Details

The issue price for the third tranche of the gold bond scheme is Rs 4,677 per gram

A third instalment of the government-run Sovereign Gold Bond (SGB) scheme will open for subscription for five days starting Monday, June 8. The Sovereign Gold Bonds - issued by the Reserve Bank of India (RBI) on behalf of the government - are part of the central government's market-borrowing programme. The issue price for the third tranche of the SGB 2020-21 scheme is Rs 4,677 per gram, the RBI said on Friday. The current series of government-run gold bonds - the Sovereign Gold Bond 2020-21 scheme - comes at a time when the rapid spread of the deadly coronavirus (COVID-19) has rattled the financial markets around the globe, but increased the appeal of the yellow metal as a safe-haven. The Sovereign Gold Bonds (SGBs) are government-run bonds - issued by the RBI - denominated in multiples of one gram of gold. (Also Read: Physical Gold, Gold ETFs Or Gold Bonds: How To Approach Gold?)

Here's all you need to know about the gold bond scheme, which is set to open for subscription on June 8:

Gold Bond Important Dates

The second tranche of the scheme will remain open from May 11 to 15, and the next instalment will open on June 8. The gold bond scheme opens six times a year. 

TrancheDate of SubscriptionDate of Issuance
2020-21 Series IApril 20-24, 2020April 28, 2020
2020-21 Series IIMay 11-15, 2020May 19, 2020
2020-21 Series IIIJune 8-12, 2020June 16, 2020
2020-21 Series IVJuly 6-10, 2020July 14, 2020
2020-21 Series VAugust 3-7, 2020August 11, 2020
2020-21 Series VIAugust 31-September 4, 2020September 8, 2020
(Source: Ministry of Finance)

Gold Bond Interest Rate

A fixed rate of 2.5 per cent per annum is applicable on the SGBs, payable semi-annually.

Who Can Buy Gold Bonds

Resident individuals, Hindu Undivided Families (HUFs), trusts, universities and charitable institutions can invest in the SGB scheme.

How To Invest In Gold Bonds

The SGBs are sold through commercial banks, the Stock Holding Corporation, designated post offices, and stock exchanges BSE and NSE. The bonds are held in RBI books or in demat form.

Gold Bond Lock-In

The gold bond scheme comes with a tenor of eight years, with an exit option after the fifth year. The option can be exercised on interest payment dates.

Gold Bond Investment Limit

A minimum of one gram and a maximum of four kilograms of gold can be acquired by eligible individuals and HUFs in a financial year. Trusts and similar entities can purchase up to 20 kilograms in a financial year.

Gold Bond Issue Price

The price is determined on the basis of a simple average of the closing price 999-purity gold published by the Mumbai-based India Bullion and Jewellers Association (IBJA) for the last three working days of the week preceding subscription. Online subscribers paying through the digital mode get a discount of Rs 50 on every gram of gold. The same method is used for determining the redemption price.

Gold Bond Tax Implication

The interest on gold bonds is taxable. However, the capital gains arising out of redemption are exempted for individual investors.