Subscription for Sovereign Gold Bond Scheme 2021-22 will be open for the next five days and investors can buy bonds at Rs 4,791 per gram of gold. The bonds can be redeemed in cash on maturity.
Subscription for Sovereign Gold Bond (SGB) Scheme 2021-22 will start from November 29 and will be open till December 3. The Reserve Bank of India (RBI) mentioned in its notice last week that the issue price for Sovereign Gold Bond Scheme 2021-22 has been fixed at Rs 4,791 per gram of gold.
What Are SGBs?
SGBs are government securities that can be considered as an alternative to physical gold. The bond, designated in grams of gold is issued by RBI on behalf of the government of India. Investors pay the issue price in cash and the bonds can be redeemed in cash on maturity. The bonds are denominated in multiples of gram(s) of gold with a basic unit of 1 gram.
The tenor of the bond is usually eight years, although investors can opt for an exit option after the fifth year. This can be exercised on designated payment dates.
The quantity of gold for which the investment has been made is protected, as the investors receive the ongoing market price at the time of redemption, even it is a premature redemption. Moreover, the risks and costs of storage are eliminated, and the investors are assured of the market value of gold at the time of maturity and they get a periodical interest of 2.50 per cent per annum. The bonds are held in the books of RBI or in demat form.
The maximum and minimum permissible investment range for SGB varies between 1gm to 4kg for an individual. Although, the maximum limit is 20 Kg for trusts and similar entities as per the recent notice of the Government of India.
Who Is Eligible To Invest in SGBs?
Any resident of India as defined under the Foreign Exchange Management Act, 1999 is eligible to invest in SGBs. Eligible investors include individuals, Hindu Undivided Families (HUFs), trusts, universities and charitable institutions. Individual investors whose residential status has changed from resident to non-resident may continue to hold SGBs till early redemption or maturity.
SGBs even provide the provision of joint holding. Even minors can be joint holders. The application on behalf of the minor needs to be made by his/her guardian. But in case of joint holding, the maximum investment limit of 4 kg will be applicable to the first applicant only.
How To Buy SBGs?
Subscription for SGBs can be completed using the application form, Form A or in any other forms related to SGBs available on the official website of RBI. Every applicant needs to submit their PAN details while completing the application.
Scheduled commercial banks (excluding regional rural banks, small finance banks and payment banks), designated post offices (as may be notified), Stock Holding Corporation of India Ltd (SHCIL), Clearing Corporation of India Limited and other recognized stock exchanges such as National Stock Exchange of India Limited and Bombay Stock Exchange Ltd are authorized to receive applications for these bonds either directly or through agents.
The receiving office issues an acknowledgment receipt in Form B to the applicant after the payment is complete.
The investors can complete the payment for the bonds either through cash (up to a maximum of Rs 20,000) or demand draft or cheque or electronic banking. SGBs will be issued as Government of India Stock under GS Act, 2006. The investors will be issued a holding certificate for the same. The bonds can also be converted into demat form.
Launched in November 2015, SGB scheme aims to reduce the demand for physical gold and shift a part of the domestic savings—used for the purchase of gold—into financial savings.