What are Sovereign Gold Bonds (SGBs)?
The Reserve Bank of India (RBI) has announced the launch of the Sovereign Gold Bond (SGB) Scheme Series III for fiscal year 2023-2024, which will be available for subscription from December 18 to December 22.
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What is the value of a Sovereign gold bond?
The value of these bonds will be determined by using the simple average of the closing price of gold with 999 purity as reported by the India Bullion and Jewellers Association (IBJA).
This average will derive from the closing gold prices for the three working days preceding the start i.e. December 13, December 14, and December 15, 2023, which works out to be ₹6,199 per gram of gold,” the Reserve Bank of India (RBI) stated in a notification on.
What is the offered interest rate?
Sovereign Gold Bonds (SGBs) pay a fixed annual interest rate of 2.50% on the initial investment amount. The interest is credited to the investor’s bank account semi-annually, and the final interest payment is made upon maturity, together with the principal invested.
Who can Invest?
- Individuals
- Hindu Undivided Families (HUFs)
- Trusts
- Universities
- Charity institutions
All are permitted to participate in Sovereign Gold Bonds (SGBs) under the Foreign Exchange Management Act 1999.
What is the minimum investment?
The minimum investment in SGBs is one gram, and these bonds are issued in denominations of one gram or multiples thereof. Individual investors have a maximum subscription limit of 4 kilograms every fiscal year (April-March).
Will joint holding will be allowed?
Yes, in joint investments, the maximum limit applies to the first application. The annual investment limit includes bonds purchased during the government’s initial issuance and in the secondary market. It is crucial to note that the investment limit does not include holdings used as collateral by banks and other financial institutions.
Can a Minors invest in SGB?
Yes, The minor’s guardian must fill out the application on his or her behalf.
What do experts say?
Suresh Shukla, Chief Business Officer, of SBI Securities said “The upcoming SGB presents a compelling investment opportunity”
Given that India is still the world’s largest consumer of gold, these bonds provide investors with a unique opportunity to diversify portfolios and profit from capital appreciation related to gold prices without the hassles of physical storage. “SBI Securities’ historical track record of consistent and high returns positions them as an appealing choice for long-term wealth creation.
While interest income is subject to taxation in the hands of investors, capital appreciation upon maturity is tax-free.
Ending remarks
Customers can apply online at the websites of the scheduled commercial banks listed below. The issuance price of the Gold Bonds will be ₹ 50 per gram less than the nominal value for those investors who apply online and make payment via digital mode.
