Sovereign Gold Bond Scheme — price, how to apply, rules and all you need to know about paper gold
May 11, 2020, 12:25 IST
- The RBI has opened the second tranche of Sovereign Gold Bond Scheme starting from May 11.
- The issue price has been fixed at ₹4,590 per gram of gold - investors can get a discount of ₹50 per gram by applying for SGBs online.
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The Reserve Bank of India (RBI) has opened the second tranche of the Sovereign Gold Bond Scheme starting today, May 11. RBI has fixed the issue price under this scheme at ₹4,590 per gram of gold.If you want a safe option to invest your surplus money, RBI’s Sovereign Gold Bond Scheme could be a good option, especially in these times of market volatility.
- What is the Sovereign Gold Bond Scheme?
Sovereign Gold Bonds (SGBs) are government securities which are denominated in the form of grams of gold. It is similar to buying gold without taking its physical delivery.SGBs are issued by the RBI on behalf of the Government of India. - How to apply for SGBs?
You can apply for SGBs either by using the form provided by the issuing banks, designated post offices, Stock Holding Corporation of India or RBI’s website. Additionally, the investors can also apply online by visiting the website of the bank.The issue price of the gold bonds will be ₹50 less than the nominal value while applying online. - What documents do I need to apply for SGBs?
The investor needs any one of the following KYC documents to invest in SGB -Proof of identity (Aadhaar card/PAN or TAN/Passport/Voter ID card) - Why should I buy SGB instead of physical gold?
Buying a SGB is superior to buying physical gold due to multiple factors, which are:a. You are assured of getting the market value of physical gold at the time of redeeming SGB.b. The risk associated with storing physical gold is eliminated by SGB as SGBs are held in demat form.c, Making charges and risk of lower purity are both eliminated. - What is the maturity period of SGBs?
SGBs come with a maturity period of 8 years.However, investors can redeem SGBs after 5 years, but this will be considered as a premature withdrawal. - What are the risks involved in SGBs?
Just like physical gold, the risk associated with SGB is very low. However, as the prices of gold depend on market performance, there may be a risk of capital loss. It must be noted that regardless of market rates, the units of gold held by the investor does not change. - Who can invest in SGB?
The Foreign Exchange Management Act of 1999 (FEMA) has formulated the eligibility criteria for investing in SGB. As per this, Indian residents, associations, trusts, HUFs, universities and charitable institutions are eligible for investing in SGB.While minors cannot hold SGBs directly, their parents or guardians can hold SGBs on behalf of them. - What is the interest rate on SGBs?
The interest rate on SGB has been fixed at 2.50% per annum and it is paid every six months. - What are the minimum and maximum investment limits for investment?
The SGBs are issued in denominations of 1 gram and in multiples thereof. The maximum limit is 4kg for individuals, 4kg for HUF and 20kg for trusts and similar entities notified by the government. An investor can buy 4kg / 20kg of SGB every year. - Who is authorized to sell SGBs?
The SGBs are sold through branches or offices of nationalized banks, scheduled private banks, scheduled foreign banks, designated post offices, Stock Holding Corporation of India, authorized stock exchanges and their agents.
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