Sovereign gold bonds, which will be opened by the Reserve Bank of India (RBI) on behalf of the central government, are opening for purchase on Monday. It will be closed on Friday. This is the first tranche (Series I) of the Sovereign Gold Bond Scheme 2023-24. Here are the details:
What Are Sovereign Gold Bonds?
Sovereign gold bonds are financial instruments that typically track the price of one gram of gold. Their price keeps changing during the gestation period depending upon the gold prices in the market. Currently, SGBs will be issued to investors at Rs 5,926 per bond. There is a Rs 50 discount per gram for investors applying and paying using digital modes – the issue price will be Rs 5,876 in such cases. Investors will get interest of 2.5 per cent on SGBs, payable half yearly.
Sovereign Gold Bonds: Who Can Purchase?
The SGBs will be restricted for sale to resident individuals, Hindu Undivided Families (HUFs), Trusts, Universities and Charitable Institutions.
Where Can You Purchase SGBs?
The SGBs will be sold through Scheduled Commercial banks (except Small Finance Banks, Payment Banks and Regional Rural Banks), Stock Holding Corporation of India Limited (SHCIL), Clearing Corporation of India Limited (CCIL), designated post offices, and recognised stock exchanges, viz., National Stock Exchange of India Limited and Bombay Stock Exchange Limited.
The SGBs will be denominated in multiples of grams of gold with a basic unit of one gram.
Maximum Buying Limit
The maximum limit of subscription shall be 4 kg for individual, 4 kg for HUF and 20 kg for trusts and similar entities per fiscal year (April-March), as notified by the government from time to time. A self-declaration to this effect will be obtained from the investors at the time of making an application for subscription. The annual ceiling will include SGBs subscribed under different tranches, and those purchased from the secondary market, during the fiscal year.
What Is the Tenure?
The tenure of the SGB will be for a period of eight years with an option of premature redemption after 5th year to be exercised on the date on which interest is payable.
Can SGBs Be Used As Collateral For Loans?
Yes. The SGBs can be used as collateral for loans. The loan-to-value (LTV) ratio will be as applicable to any ordinary gold loan, mandated by the Reserve Bank from time to time.
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