BIG_SGB

Sovereign Gold Bond (SGB)




Sovereign Gold Bonds are government securities issued by the Reserve Bank of India (RBI) on behalf of the Government of India. They are denominated in grams of gold and can be purchased instead of physical gold. Investors can buy these bonds through exchange at issue price, when RBI announces a fresh sale or they can purchase it immediately through exchange at current price like any other security. Investors can redeem these bonds for cash upon maturity of the bonds or can sell it on exchange at current prices.

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About Sovereign Gold Bonds

  • SGB is the only gold investment which offers a fixed return annually (ROI disclosed at time of issue) on face value of bond
  • SGB is easy to store and easy to liquidate compared to other forms of investments
  • It provides transparency in dealing and assurance in quality
  • Sovereign guarantee for redemption amount and interest payment.


Benefits of SGB

Safety

There is no need for storage or safety of gold under this scheme, as the gold isn’t physically given to an investor immediately.

Sovereign guarantee

They come with sovereign guarantee, both on the capital invested and the interest. This makes it a secured investment.

Interest

SGB comes with a assured fixed rate interest per annum on the initial investment, making it a lucrative investment opportunity.

Withdrawal

Investor can exit the bond at the end of 5th , 6th or 7th year.

Tax benefits

There is no TDS or Capital Gain arising on redemption of the bonds.

Exchange Traded

These bonds are listed and traded on the stock exchange making it easy to buy or sell.

Sovereign Gold Bond Features

  • Eligibility:

    • Any resident Indian entity including HUFs, individuals, Trusts, Universities and Charitable institutions can invest in the sovereign gold bond.

  • Denomination:

    • Bonds are denominated in whole number multiples of one gram of gold.

  • Minimum value:

    • The minimum permissible investment in sovereign gold bonds is equivalent to one gram of gold.

  • Cap on value:

    • Individuals and HUFs can invest in a maximum of 4kg worth of gold bonds. Trusts and other similar entities can invest in up to 20kg worth of gold bonds. The limit is periodically revised by the Government of India.

  • Interest rate:

    • For each tranche of sovereign gold bonds the interest rate is declared by RBI. The interest on such bonds is paid semi-annually.

  • Tenure:

    • Sovereign gold bonds have a tenure of eight years. Investors can exercise an exit option from the fifth year onwards. The exit option can only be exercised on the day the interest is payable.

  • Redemption:

    • Redemption price of the sovereign gold bond is equal to the simple average of the closing price of gold of 999 purity of previous 3 business days. The price published by the Indian Bullion and Jewelers Association Limits is used for this calculation.

Source:https://m.rbi.org.in/scripts/FS_FAQs.aspx?Id=109&fn=2757