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Looking To Invest In Sovereign Gold Bonds? Here's All You Need To Know

For the current series of gold bonds, the price of one gram of gold has been kept at Rs 3788, according to a statement by Reserve Bank of India.

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Looking To Invest In Sovereign Gold Bonds? Here's All You Need To Know

SGB is issued by Reserve Bank India on behalf of Government of India.

The fifth series (Series V) of Sovereign Gold Bonds scheme (SGBs) 2019-20 opened for subscription on Monday. SGB, a government-run scheme, allows gold investments in non-physical form. For the current series of gold bonds, the price of one gram of gold has been kept at Rs 3,788, according to a statement by the Reserve Bank of India (RBI). The RBI is offering a discount of Rs 50 per gram on the original value to investors applying online. The subscription of SGB Series V will end on October 11 and the settlement date for the same is October 15.
Here are 10 things to know about Sovereign Gold Bond (SGB) scheme:
  1. SGB is issued by Reserve Bank India on behalf of Government of India and is sold through scheduled commercial banks (except small finance banks and payment banks), Stock Holding Corporation of India Limited (SHCIL), designated post offices, and recognised stock exchanges NSE and BSE, according to RBI website - rbi.org.in.
  2. The SGB scheme comprises government securities denominated in gold wherein investors are required to pay the issue price in cash. The bonds are redeemed in cash on maturity.
  3. SGB is restricted for sale to resident individuals, HUFs (Hindu Undivided Families), trusts, universities and charitable institutions, according to RBI.
  4. The price of bond is fixed in rupees on the basis of a simple average of closing price of gold of 99.9 per cent purity, published by the India Bullion and Jewellers Association Limited for the last three working days of the week preceding the subscription period.  
  5. The bonds bear interest from the date of issue at the rate of 2.50 per cent (fixed rate) per annum on the nominal value. 
  6. Cash, demand draft, cheque and electronic banking (net banking) are allowed as modes of payment for investment in the gold bonds.
  7. The tenor of the bond is for a period of eight years with exit option after fifth year to be exercised on the interest payment dates.
  8. The minimum permissible amount allowed for investment in SGB is one gram of gold.
  9. The maximum limit of the subscription is four kilograms for individuals and HUFs, and 20 kilograms for trusts and similar entities per fiscal year (April-March), which is notified by the government from time to time.
  10. Bonds are tradable on stock exchanges within a fortnight of the issuance on a date as notified by the RBI.




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