Sovereign Gold Bond Scheme opens today: All you need to know

The
Sovereign Gold Bond (SGB) Scheme 2021-22 – Series X has opened for subscription
from today, February 28. The issue price for this tranche of the scheme has
been fixed at Rs 5,109 per gram of gold, by the Reserve Bank of India (RBI). 

The government is giving a discount of Rs 50 per gram to
the investors applying online and the payment against the application made on
digital mode. “For such investors, the issue price of Gold Bond will be Rs
5,059 per gram of gold,” RBI said.

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According to the RBI notice, the last date for the
subscription of bonds is March 4 and the certificate of bonds will be issued on
March 8.

Here is all you need to know:

1) SGBs are government-backed securities in denominations
of one gram and further multiples, which can be used as a substitute for
physical gold, excluding the costs of buying, selling and storing it. The scheme
was launched under the Gold Monetisation Scheme in 2015. Its objective was to
reduce the demand for physical gold and shift a part of the domestic savings – used for the purchase of the yellow metal – into financial savings.

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2) The bonds will be sold through Scheduled Commercial
banks, Stock Holding Corporation of India Limited (SHCIL), Clearing Corporation
of India Limited (CCIL), designated post offices, and recognised stock
exchanges – National Stock Exchange (NSE) and Bombay Stock Exchange (BSE).

3) The Know-your-customer (KYC) norms are the same as
that for the purchase of physical gold. Payments can be made through cash
(maximum limit Rs 20,000) or demand draft, cheque, or internet banking.

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4) The bonds will be restricted for sale to resident
individuals, HUFs, trusts, universities, and charitable institutions.

5) RBI fixes the issue price of a bond based on a simple
average of the closing prices of 999 purity gold as published by the Indian
Bullion and Jewellers Association (IBJA) on the last three working days before
the week marked for the subscription. In this case, the dates would be February
23, 24, and 25.

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6) The tenure of the bond is eight years with an exit
option after the sixth year to be exercised on the next interest payment dates.

7) The minimum permissible investment will be 1 gram and
the maximum limit is 4kg for an individual, 4Kg for HUF and 20kg for trusts per
fiscal (April-March).

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8) The bonds offer a fixed 2.50% interest per annum based
on the initial investment. The interest is payable semi-annually, with the last
interest payable on maturity along with the principal amount.

9) These bonds can be used as collateral for loans
similar to an ordinary gold loan, as mandated by the RBI.

10) The issue price for Series IX, which was open for
subscription during January 10-14, was Rs 4,786 per gram of gold.