The government in consultation with the Reserve Bank of India has issued its 12th series of Sovereign Gold Bonds 2020-21 (Series XII ). The issue opened for subscription from March 1 to March 5, 2021, with 9 March 2021 as its settlement date. The Reserve Bank of India has issued a total of sovereign gold bonds in six tranches from October 2020 to March 2021. The Government of India introduced the Sovereign Gold Bond (SGB) Scheme in November 2015.
What are Sovereign Gold Bonds?
Sovereign Gold Bonds are the Government Securities issued by the Reserve Bank of India. These are denominated in grams of gold (1 unit = 1 gram). They are substitutes for holding physical gold. Investors have to pay the issue price in cash and the bonds are redeemed in cash on maturity. SGBs are government securities and are considered safe.
Benefits of Sovereign Gold Bonds 2020-21 :
1) DISCOUNT: A discount of Rs. 50 per gram on the issue price is given to those investors who apply online and the payment is made through digital mode. For such investors, the issue price of the Sovereign Gold Bond will be Rs. 5,054 per gram of gold.
2) ABSOLUTE SAFETY: Sovereign Gold Bonds carry none of the risks that are associated with physical gold. There is no designing charge or TDS here. Therefore, nobody can steal it or change its ownership.
3) INTEREST RATES: Gold bonds offer an annual interest rate of 2.50% per annum on the issue price to investors, which is paid half-yearly. One can trade gold sovereign bonds on stock exchanges within a specific date.
4) LIQUIDITY: The tenure of the Bond will be for 8 years with an exit option after the 5th year to be exercised on the interest payment dates.
5) INVESTMENT LIMIT: Minimum permissible investment will be 1 gram of gold. The maximum limit of subscribed shall be 4 KG for individual, 4 Kg for HUF and 20 Kg for trusts and similar entities per fiscal (April-March) notified by the Government from time to time. A self-declaration to this effect will be obtained. The annual ceiling will include bonds subscribed under different tranches during initial issuance by Government and those purchased from the Secondary Market.
6) COLLATERAL: Bonds can be used as collateral for loans. The loan-to-value (LTV) ratio is to be set equal to ordinary gold loan mandated by the Reserve Bank from time to time
7) SOLD EITHER DIRECTLY OR THROUGH AGENTS: Bonds can be sold through Commercial banks, Stock Holding Corporation of India Limited (SHCIL), designated post offices and recognised stock exchanges viz., National Stock Exchange of India Limited and Bombay Stock Exchange, either directly or through agents.
WhatsApp us