The RBI has introduced the Sovereign Gold Bond (SGB) Scheme Series III for the fiscal year 2023-2024, available for subscription from December 18 to December 22, 2023, with a settlement date of December 28, 2023. The issue price per gram during the subscription period is ₹6,199, as detailed in the RBI’s Press Release on December 15, 2023.
The valuation of these bonds is determined by the simple average of the closing price of gold with 999 purity, according to the India Bullion and Jewellers Association (IBJA). This average is calculated using the closing prices of gold for the three working days before the subscription period begins.
To encourage online applications and digital payments, the Government of India, in collaboration with the Reserve Bank of India, has decided to offer a ₹50 discount per gram from the issue price. Consequently, the issue price for Gold Bonds will be ₹6,149 per gram for investors who apply online and make payments through digital mode.
What is Sovereign Gold Bonds (SGBs)?
Sovereign Gold Bonds (SGBs) are government securities denominated in grams of gold, offering a secure alternative to physical gold ownership. The RBI issues these bonds on behalf of the Government of India, ensuring investor protection by providing the prevailing market price of gold upon redemption. This feature safeguards the value of the initially invested gold quantity, making SGBs more attractive than holding physical gold.
Who can Invest?
Eligible investors include individuals, Hindu Undivided Families (HUFs), trusts, universities, and charitable institutions classified as residents in India under the Foreign Exchange Management Act, 1999. Investors experiencing a change in residential status from resident to non-resident are allowed to retain SGBs until early redemption or maturity.
How much Interest rate will be paid?
SGBs provide a fixed interest rate of 2.50% per annum on the initial investment, with semi-annual interest credited to the investor’s bank account. The final interest payment is made at maturity, along with the principal amount invested.
The minimum investment in SGBs is 1 gram, with bonds issued in denominations of one gram or multiples thereof. Individual and Hindu Undivided Family (HUF) investors have a maximum subscription limit of 4 kg per fiscal year, while trusts and entities specified by the government have a higher limit of 20 kg. Joint investments follow the same maximum limit, applicable to the first applicant. The annual investment limit covers bonds obtained during the initial issuance and those acquired from the secondary market, excluding holdings used as collateral by financial institutions.
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