The government in consultation with the RBI is going to release sovereign gold bonds (SGBs) this month, and more are planned for February. People can sign up for the 2023-24 Series III from December 18 to December 22, 2023, and the bonds will be issued on December 28, 2023. For the 2023-24 Series IV, the subscription period is from February 12 to February 16, 2024, and the bonds will be issued on February 21, 2024. The Reserve Bank issues these bonds on behalf of the Government of India.
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Sovereign gold bond upcoming issues : Important Dates
Sovereign Gold Bond Scheme 2023-24: Series III and IV
- Series III:
- Subscription: December 18-22, 2023
- Issuance Date: December 28, 2023
- Series IV:
- Subscription: February 12-16, 2024
- Issuance Date: February 21, 2024
Sovereign Gold Bonds (SGBs) 2023-24 Series III Rate
On December 15, the Reserve Bank of India decided that the Sovereign Gold Bonds (SGBs) 2023-24 Series III will be priced at ₹6,199 per gram. If you subscribe online, you’ll get a discount of ₹50 per gram.
Let’s Understand Sovereign Gold Bond and its Features in Detail
Introduction to Sovereign Gold Bond (SGB)
1.1 What is Sovereign Gold Bond and who is the issuer?
Sovereign Gold Bonds (SGBs) are a unique investment avenue, government securities denominated in grams of gold, acting as substitutes for holding physical gold. The issuer of these bonds is the Reserve Bank of India (RBI) on behalf of the Government of India.
1.2 Sovereign Gold Bond vs. Physical Gold: Why the Shift?
Investors might be curious about why they should go for SGBs instead of actual gold. The answer is in making sure you get the right amount of gold you paid for, ensuring its market value when it matures, and avoiding the risks and expenses of keeping physical gold.
Benefits of Choosing SGB Over Physical Gold
2.1 Quantity Protection and Market Price
Investors paying for SGBs are shielded from fluctuations in the market price. At the time of redemption, they receive the ongoing market price, ensuring the preservation of the invested quantity’s value.
2.2 Elimination of Storage Risks and Costs
SGBs provide a superior alternative by eliminating the risks and costs associated with storing physical gold. Held in the books of the RBI or in demat form, SGBs eradicate concerns about loss or damage to physical scrip.
2.3 Assured Market Value, Interest, and Purity
Investors in SGBs enjoy the assurance of the market value of gold at maturity, along with periodical interest. Moreover, SGBs are free from making charges and purity issues, common concerns with gold in jewellery form.
Understanding the Risks Involved in SGB Investments
3.1 Capital Loss Concerns
One potential risk in SGB investments is the possibility of capital loss if the market price of gold declines. However, it’s important to note that investors do not lose in terms of the units of gold they initially paid for.
3.2 Safeguarding Gold Units
While capital loss risk exists, the preservation of the quantity of gold invested provides a level of security for investors, making SGBs an attractive option.
Eligibility Criteria for SGB Investors
4.1 Residency Requirements
Persons resident in India, as defined under the Foreign Exchange Management Act, 1999, are eligible to invest in SGBs.
4.2 Individuals, HUFs, Trusts, and Institutions
Eligible investors encompass individuals, Hindu Undivided Families (HUFs), trusts, universities, and charitable institutions. Even individuals with a subsequent change in residential status can continue to hold SGBs until early redemption/maturity.
Sovereign Gold Bond rules for Joint Holdings and Minors
5.1 Permissibility of Joint Holdings
Yes, joint holding is allowed, providing flexibility for investors who prefer shared ownership.
5.2 Minor Investors: A Possibility?
Minors can also participate in SGB investments. The application on behalf of the minor has to be made by their guardian.
Obtaining Application Forms and KYC Norms
6.1 Application Sources
Investors can obtain the application form from issuing banks, SHCIL offices, designated Post Offices, or agents. It’s also available for download from the RBI’s website, with some banks offering online application facilities.
6.2 Crucial KYC Requirements
Every application must be accompanied by the ‘PAN Number’ issued by the Income Tax Department to the investor(s), ensuring compliance with KYC norms.
Sovereign Gold Bond Investment Limits: Minimum and Maximum
7.1 Denominations and Multiples
SGBs are issued in denominations of one gram of gold and in multiples thereof. The minimum investment is one gram, with a maximum limit of subscription varying for different entities.
7.2 Annual Ceiling Explained
The annual ceiling encompasses bonds subscribed under different tranches during the fiscal year. However, the ceiling on investment excludes holdings as collateral by banks and other financial institutions.
Sovereign Gold Bond Interest Rates and Payment Mechanism
8.1 Fixed Interest Rate
SGBs offer a fixed interest rate of 2.50% per annum on the amount of initial investment.
8.2 Semi-Annual Interest Payments
Interest is credited semi-annually to the bank account of the investor, with the final interest payable on maturity along with the principal.
How to invest in Sovereign Gold Bond?
Authorized Agencies for SGB Transactions
9.1 Banks, SHCIL, Post Offices, and Exchanges
Bonds are sold through various channels, including offices or branches of Nationalised Banks, SHCIL, designated Post Offices, and authorized stock exchanges like NSE and BSE.
9.2 Ensuring Allotment
Meeting eligibility criteria, providing valid identification documents, and timely remittance of application money guarantees allotment.
Sovereign Gold Bond – Holding Certificates and Redemption Process
10.1 Issuance of Holding Certificates
Customers receive a Certificate of Holding on the date of SGB issuance. Certificates can be collected from issuing banks, SHCIL offices, Post Offices, or designated stock exchanges.
10.2 Redemption on Maturity
On maturity, SGBs are redeemed in Indian Rupees, with the redemption price based on the simple average of the closing price of gold over the previous 3 business days.
Online Application and Digital Benefits
11.1 Convenient Online Application
Investors can apply online through the websites of listed scheduled commercial banks, enjoying a price advantage of ₹50 per gram when applying online and paying through digital modes.
11.2 Digital Price Advantage
The digital application process provides cost savings for investors, making the online route an attractive option.
Pricing Mechanism and Daily Rate Publication
12.1 Determining Nominal Value
The nominal value of SGBs is fixed based on the simple average of the closing price of gold of 999 purity, as published by the India Bullion and Jewellers Association Limited.
12.2 Daily Gold Rate Updates
The daily gold rate for the relevant tranche is published on the RBI website two days before the issue opens, offering transparency to investors.
Sovereign Gold Bond Price History
| Sovereign Gold Bond Price History | ||
| Sovereign Gold Bond : Price history FY 2023-24 | ||
| Series | Month | Price per Gram |
| Series 1 | 01/06/23 | Rs. 5,926 |
| Series 2 | 01/09/23 | Rs. 5,923 |
| The price history of Sovereign Gold Bond for FY 2022-23 | ||
| Series | Month | Price per Gram |
| Series 1 | 01/06/22 | Rs. 5,041 |
| Series 2 | 01/08/22 | Rs. 5,091 |
| Series 3 | 01/12/22 | Rs. 5,409 |
| Series 4 | 01/03/23 | Rs. 5,611 |
| The price history of Sovereign Gold Bond for FY 2021-22 | ||
| Series | Month | Price per Gram |
| Series 1 | 01/05/21 | Rs. 4,777 |
| Series 2 | 01/05/21 | Rs. 4,842 |
| Series 3 | 01/06/21 | Rs. 4,889 |
| Series 4 | 01/07/21 | Rs. 4,807 |
| Series 5 | 01/08/21 | Rs. 4,790 |
| Series 6 | 01/09/21 | Rs. 4,732 |
| Series 7 | 01/10/21 | Rs. 4,765 |
| Series 8 | 01/11/21 | Rs. 4,791 |
| Series 9 | 01/01/22 | Rs. 4,786 |
| Series 10 | 01/03/22 | Rs. 5,109 |
The Sovereign Gold Bonds (SGBs) 2023-24 Series III will be priced at ₹6,199 per gram. If you subscribe online, you’ll get a discount of ₹50 per gram.
Redemption Details: What to Expect
13.1 Maturity Redemption Process
On maturity, SGBs are redeemed in Indian Rupees, and the redemption price is determined by the simple average of the closing price of gold over the previous 3 business days.
13.2 Crediting Redemption Amount
Both interest and redemption proceeds are credited to the bank account furnished by the customer at the time of buying the bond.
Premature Redemption and Tradable Options
14.1 Early Exit After Fifth Year
While the tenor of the bond is 8 years, early encashment or redemption is allowed after the fifth year from the date of issue on coupon payment dates.
14.2 Trading SGBs on Exchanges
SGBs held in demat form are tradable on exchanges, providing liquidity options for investors. Transfers to other eligible investors are also possible.
Exiting Investments and Gifting SGBs
15.1 Procedure for Part Repayment
Investors can partially exit their investments after the lock-in period, and the redemption amount is credited to their registered bank account.
15.2 Gifting Bonds to Relatives
SGBs also offer the flexibility of gifting bonds to relatives, providing a unique avenue for sharing the wealth-preserving benefits of gold.
SGBs as Collateral and Tax Implications
16.1 Collateral for Loans
SGBs can be used as collateral for loans, providing a valuable asset that can be leveraged for financial requirements.
16.2 Taxation Nuances Unveiled
While Sovereign Gold Bonds do not attract Tax Deducted at Source (TDS), investors need to be aware of the tax implications, including capital gains tax on redemption.
Customer Services and Contacting RBI
17.1 Post-Issuance Services
Post issuance, investors can avail various services through designated banks, including requests for duplicate certificates, change of address, or early redemption.
17.2 Dedicated RBI Query Platform
For any queries or clarifications, the RBI has a dedicated email address for SGB investors, ensuring prompt and efficient resolution.
Sovereign Gold Bond Email Id of Reserve Bank of India : sgb@rbi.org.in
Sovereign Gold Bond related RBI Link : https://www.rbi.org.in/commonperson/English/Scripts/FAQs.aspx?Id=1658
Conclusion
In conclusion, Sovereign Gold Bonds emerge as a promising avenue for investors, providing a secure alternative to physical gold. With a detailed understanding of the intricacies involved, investors can navigate the SGB landscape confidently. As the Reserve Bank of India unveils new tranches, it’s an opportune time to explore the wealth-preserving potential of these bonds.
FAQ – Sovereign Gold Bond
What is the Sovereign Gold Bond Scheme 2023-24, and who is the issuer?
The Sovereign Gold Bond (SGB) is a government security denominated in grams of gold, acting as a substitute for physical gold. The issuer is the Reserve Bank of India (RBI) on behalf of the Government of India.
Why choose Sovereign Gold Bonds over physical gold?
SGBs offer quantity protection, shielding investors from market price fluctuations. They eliminate storage risks and costs associated with physical gold, ensuring assured market value, interest, and purity.
What are the benefits of choosing SGB over physical gold?
Quantity Protection and Market Price
Elimination of Storage Risks and Costs
Assured Market Value, Interest, and Purity
What are the risks involved in SGB investments?
Potential risks include capital loss due to a decline in the market price of gold. However, investors do not lose in terms of the units of gold they initially paid for.
Who is eligible to invest in Sovereign Gold Bonds?
Individuals, HUFs, trusts, universities, and charitable institutions resident in India as per the Foreign Exchange Management Act, 1999.
Can SGBs be held jointly, and can minors invest?
Yes, joint holding is allowed.
Minors can participate, with the application made on behalf of the minor by their guardian.
How to obtain SGB application forms, and what are the KYC requirements?
Application forms are available at issuing banks, SHCIL offices, designated Post Offices, or online.
Every application must be accompanied by the investor’s PAN Number for KYC compliance.
What are the investment limits for Sovereign Gold Bonds?
SGBs are issued in denominations of one gram of gold.
The minimum investment is one gram, with varying maximum limits for different entities.
What are the interest rates and payment mechanisms for Sovereign Gold Bonds?
Fixed interest rate of 2.50% per annum.
Interest is credited semi-annually, with the final interest payable on maturity along with the principal.
How to invest in Sovereign Gold Bonds, and where are they available?
Bonds can be purchased through Nationalised Banks, SHCIL, designated Post Offices, and authorized stock exchanges like NSE and BSE.
Online applications are available with a price advantage for digital transactions.
What is the process for redemption of Sovereign Gold Bonds?
On maturity, SGBs are redeemed in Indian Rupees based on the average gold price over the previous 3 business days.
Both interest and redemption proceeds are credited to the bank account provided at the time of purchase.
Can Sovereign Gold Bonds be used as collateral for loans, and what are the tax implications?
Yes, SGBs can be used as collateral for loans.
While they do not attract TDS, investors should be aware of capital gains tax on redemption.
How to contact RBI for Sovereign Gold Bond-related queries?
For queries or clarifications, investors can contact the RBI through the dedicated email address: sgb@rbi.org.in.
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