Sovereign Gold Bond
Invest in gold and secure your financial future with the Sovereign Gold Bond. IDBI Bank invites you to explore this unique investment opportunity to own gold in a convenient and hassle-free manner while earning interest on your investment. These Bonds are an ideal choice for investors looking for diversification of their portfolio while enjoying the benefits of gold ownership. Sovereign Gold Bonds are a series of bonds issued by the Government of India, denominated in grams of gold. SGB eliminates the need for storing physical gold and provides a secure and convenient way to hold the precious metal. Here's 7 reason why you should invest:
Why you should Invest?
- Safety and Sovereign Backing: Sovereign Gold Bonds are issued by Reserve Bank of India on behalf of the Government of India, making them one of the safest forms of gold investment available. You can invest in gold without worrying about storage and security concerns.
- Capital Appreciation:As these bonds are linked to the market price of gold, investors have the potential to earn capital appreciation if the price of gold rises during the tenure of the bond.
- Fixed Interest Income: Apart from the potential for capital appreciation, investors also receive a fixed annual interest on their investments, currently at 2.50% per annum, payable semi-annually. This interest further enhances the overall returns on the investment.
- Flexible Tenure: Sovereign Gold Bonds typically have a tenure of 8 years, with an exit option available after the fifth year. This provides investors with the flexibility to hold the bonds until maturity or to liquidate the investment partially after the lock-in period.
- Liquidity and Tradability: SGBs are listed on Stock Exchanges, will be tradable on Exchanges, if held in Demat form. It can also be transferred to any other eligible investor. This enhances the liquidity of the investment and ensures easy exit from the investment if required.
- Purity and Security: Each bond represents 1 gram of gold and is backed by the Government of India. You can be confident in the purity and authenticity of the gold, as it is issued by the Reserve Bank of India (RBI).
- Tax Benefits: Interest on the Bonds will be taxable as per the provisions of the Income-tax Act, 1961 (43 of 1961). The capital gains tax arising on redemption of SGB to an individual has been exempted. The indexation benefits will be provided to long terms capital gains arising to any person on transfer of bond. TDS is not applicable on the bond. However, it is the responsibility of the bond holder to comply with the tax laws.
Upcoming SGB Tranche Dates
Government of India, in consultation with the Reserve Bank of India, has decided to issue Sovereign Gold Bonds (SGBs) in tranches as per the calendar specified below:
|Sr. No.||Tranche||Subscription Period||Date of Issuance|
|1||2023-24 Series II||September 11 – September 15, 2023||September 20, 2023|
Features of Sovereign Gold Bonds
|1||Product name||Sovereign Gold Bond Scheme 2023-24|
|2||Issuance||To be issued by the Reserve Bank of India on behalf of the Government of India.|
|3||Eligibility||The SGBs will be restricted for sale to resident individuals, HUFs, Trusts, Universities and Charitable Institutions.|
|4||Denomination||The SGBs will be denominated in multiples of gram(s) of gold with a basic unit of One gram.|
|5||Tenor||The tenor 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.|
|6||Minimum size||Minimum permissible investment will be One gram of gold.|
|7||Maximum 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.|
|8||Joint holder||In case of joint holding, the investment limit of 4 Kg will be applied to the first applicant only.|
|9||Issue price||Price of SGB will be fixed in Indian Rupees on the basis of simple average of closing price of gold of 999 purity, published by the India Bullion and Jewellers Association Limited (IBJA) for the last three working days of the week preceding the subscription period. The issue price of the SGBs will be less by ₹50 per gram for the investors who subscribe online and pay through digital mode.|
|10||Payment option||Payment for the SGBs will be through cash payment (upto a maximum of ₹20,000) or demand draft or cheque or electronic banking.|
|11||Issuance form||The SGBs will be issued as Government of India Stock under the Government Securities Act, 2006. The investors will be issued a Certificate of Holding for the same. The SGBs will be eligible for conversion into demat form.|
|12||Redemption price||The redemption price will be in Indian Rupees based on simple average of closing price of gold of 999 purity, of previous three working days published by IBJA Ltd.|
|13||Sales channel||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 (as may be notified) and recognised stock exchanges viz., National Stock Exchange of India Limited and Bombay Stock Exchange Limited, either directly or through agents.|
|14||Interest rate||The investors will be compensated at a fixed rate of 2.50 percent per annum payable semi-annually on the nominal value.|
|15||Collateral||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.|
|16||KYC documentation||Know-your-customer (KYC) norms will be the same as that for purchase of physical gold. KYC documents such as Voter ID, Aadhaar card/PAN or TAN /Passport will be required. Every application must be accompanied by the ‘PAN Number’ issued by the Income Tax Department to individuals and other entities.|
|17||Tax treatment||The interest on SGBs shall be taxable as per the provision of Income Tax Act, 1961 (43 of 1961). The capital gains tax arising on redemption of SGB to an individual is exempted. The indexation benefits will be provided to long term capital gains arising to any person on transfer of the SGB.|
|18||Tradability||SGBs shall be eligible for trading.|
|19||SLR eligibility||SGBs acquired by the banks through the process of invoking lien/hypothecation/pledge alone, shall be counted towards Statutory Liquidity Ratio.|
Who can Apply?
You can apply for the Sovereign Gold Bonds if you are:
- Resident Individual
- Resident Individual on behalf of a Minor
- Hindu Undivided Family
- Charitable Institutions
PAN number is mandatory.
Note: NRI’s are not eligible to invest in Sovereign Gold Bond scheme however they can be a nominee.
How to Apply?
Applying for the Sovereign Gold Bond with IDBI Bank is quick and straightforward. Follow these simple steps to get started:
You can Login to your Internet banking and apply for Sovereign Gold Bond during Tranche under Investments option.Apply Now
- Visit your nearest IDBI Bank branch to obtain the application form.
- Fill in the required details, such as your personal information, investment amount, and bank account details.
- Submit the completed application form along with the necessary documents, including proof of identity, address, and PAN card.
- Make the payment for your investment through a cheque or online transfer.
- Once your application is processed, you will receive a confirmation and an allotment advice for your Sovereign Gold Bond.
SGBs are government securities denominated in grams of gold. They are substitutes for holding physical gold. Investors have to pay the issue price in cash and the bonds will be redeemed in cash on maturity. The Bond is issued by Reserve Bank on behalf of Government of India.
The quantity of gold for which the investor pays is protected, since he receives the ongoing market price at the time of redemption/ premature redemption. The SGB offers a superior alternative to holding gold in physical form. The risks and costs of storage are eliminated. Investors are assured of the market value of gold at the time of maturity and periodical interest. SGB is free from issues like making charges and purity in the case of gold in jewelry form. The bonds are held in the books of the RBI or in demat form eliminating risk of loss of scrip etc.
There may be a risk of capital loss if the market price of gold declines. However, the investor does not lose in terms of the units of gold which he has paid for.
Persons resident in India as defined under Foreign Exchange Management Act, 1999 are eligible to invest in SGB. Eligible investors include individuals, HUFs, trusts, universities and charitable institutions. Individual investors with subsequent change in residential status from resident to non-resident may continue to hold SGB till early redemption/maturity.
Yes, joint holding is allowed.
Yes. The application on behalf of the minor has to be made by his/her guardian.
The application form will be available at all branches of IDBI Bank. It can also be downloaded from the RBI’s website.
Every application must be accompanied by the ‘PAN Number’ issued by the Income Tax Department to the investor(s).
No. An investor can have only one unique investor Id linked to any of the prescribed identification documents. The unique investor ID is to be used for all the subsequent investments in the scheme. For holding securities in dematerialized form, quoting of PAN in the application form is mandatory.
The Bonds are issued in denominations of one gram of gold and in multiples thereof. Minimum investment in the Bond shall be one gram with a maximum limit of subscription of 4 kg for individuals, 4 kg for Hindu Undivided Family (HUF) and 20 kg for trusts and similar entities notified by the government from time to time per fiscal year (April – March). In case of joint holding, the limit applies to the first applicant. The annual ceiling will include bonds subscribed under different tranches during initial issuance by Government and those purchased from the secondary market. The ceiling on investment will not include the holdings as collateral by banks and other Financial Institutions
Yes, each family member can buy the bonds in his/her own name if they satisfy the eligibility criteria as defined at Q No.4.
Yes. An investor/trust can buy 4 Kg/20 Kg worth of gold every year as the ceiling has been fixed on a fiscal year (April-March) basis.
The maximum limit will be applicable to the first applicant in case of a joint holding for that specific application.
The Bonds bear interest at the rate of 2.50 per cent (fixed rate) per annum on the amount of initial investment. Interest will be credited semi-annually to the bank account of the investor and the last interest will be payable on maturity along with the principal.
Bonds are sold through offices or branches of Nationalised Banks, Scheduled Private Banks, Scheduled Foreign Banks, designated Post Offices, Stock Holding Corporation of India Ltd. (SHCIL) and the authorised stock exchanges either directly or through their agents.
If the customer meets the eligibility criteria, produces a valid identification document and remits the application money on time, he/she will receive the allotment.
The customers will be issued Certificate of Holding on the date of issuance of the SGB. Certificate of Holding can be collected from the issuing Bank Branches or obtained directly from RBI on email, if email address is provided in the application form.
Yes. A customer can apply online via IDBI Bank’s Internet banking. The issue price of the Gold Bonds will be ₹50 per gram less than the nominal value to those investors applying online and the payment against the application is made through digital mode.
The nominal value of Gold Bonds shall be in Indian Rupees fixed on the basis of simple average of closing price of gold of 999 purity, published by the India Bullion and Jewelers Association Limited, for the last 3 business days of the week preceding the subscription period.
The price of gold for the relevant tranche will be published on RBI website two days before the issue opens.
On maturity, the Gold Bonds shall be redeemed in Indian Rupees and the redemption price shall be based on simple average of closing price of gold of 999 purity of previous 3 business days from the date of repayment, published by the India Bullion and Jewelers Association Limited.
Both interest and redemption proceeds will be credited to the bank account furnished by the customer at the time of buying the bond.
- The investor will be advised one month before maturity regarding the ensuing maturity of the bond.
- On the date of maturity, the maturity proceeds will be credited to the bank account as per the details on record.
- In case there are changes in any details, such as, account number, email ids, then the investor must intimate the bank/SHCIL/PO promptly.
Though the tenor of the bond is 8 years, early encashment/redemption of the bond is allowed after fifth year from the date of issue on coupon payment dates. The bond will be tradable on Exchanges, if held in demat form. It can also be transferred to any other eligible investor.
In case of premature redemption, investors can approach the Bank thirty days before the coupon payment date. Request for premature redemption can only be entertained if the investor approaches the bank at least one day before the coupon payment date. The proceeds will be credited to the customer’s bank account provided at the time of applying for the bond.
The bond can be gifted/transferable to a relative/friend/anybody who fulfills the eligibility criteria (as mentioned at Q.no. 4). The Bonds shall be transferable in accordance with the provisions of the Government Securities Act 2006 and the Government Securities Regulations 2007 before maturity by execution of an instrument of transfer which is available with the issuing agents.
Yes, these securities are eligible to be used as collateral for loans from banks, financial Institutions and Non-Banking Financial Companies (NBFC). The Loan to Value ratio will be the same as applicable to ordinary gold loan prescribed by RBI from time to time. Granting loan against SGBs would be subject to decision of the bank/financing agency, and cannot be inferred as a matter of right.
Interest on the Bonds will be taxable as per the provisions of the Income-tax Act, 1961 (43 of 1961). The capital gains tax arising on redemption of SGB to an individual has been exempted. The indexation benefits will be provided to long terms capital gains arising to any person on transfer of bond.
TDS is not applicable on the bond. However, it is the responsibility of the bond holder to comply with the tax laws.
The issuing banks/SHCIL offices/Post Offices/Designated stock exchanges/agents through which these securities have been purchased will provide other customer services such as change of address, early redemption, nomination, grievance redressal, transfer applications etc.
Payment can be made through cash (upto ₹20000)/cheques/demand draft/electronic fund transfer.
Yes, nomination facility is available as per the provisions of the Government Securities Act 2006 and Government Securities Regulations, 2007. A nomination form is available along with Application form. An individual Non - resident Indian may get the security transferred in his name on account of his being a nominee of a deceased investor provided that:
- the Non-Resident investor shall need to hold the security till early redemption or till maturity; and
- the interest and maturity proceeds of the investment shall not be repatriable.
Yes. The bonds can be held in demat account. A specific request for the same must be made in the application form itself.
Till the process of dematerialization is completed, the bonds will be held in RBI’s books. The facility for conversion to demat will also be available subsequent to allotment of the bond.
The bonds are tradable from a date to be notified by RBI. (It may be noted that only bonds held in de-mat form with depositories can be traded in stock exchanges) The bonds can also be sold and transferred as per provisions of Government Securities Act, 2006. Partial transfer of bonds is also possible.
The nominee/nominees to the bond may approach the respective Receiving Office with their claim. The claim of the nominee/nominees will be recognized in terms of the provision of the Government Securities Act, 2006 read with Chapter III of Government Securities Regulation, 2007. In the absence of nomination, claim of the executors or administrators of the deceased holder or claim of the holder of the succession certificate (issued under Part X of Indian Succession Act) may be submitted to the Receiving Offices/Depository. It may be noted that the above provisions are applicable in the case of a deceased minor investor also. The title of the bond in such cases too will pass to the person fulfilling the criteria laid down in Government Securities Act, 2006 and not necessarily to the Natural Guardian.
Yes, part holdings can be redeemed in multiples of one gm.
A dedicated e-mail has been created by the Reserve Bank of India to receive queries from members of public on Sovereign Gold Bonds. Investors can mail their queries to this email id firstname.lastname@example.org