Sovereign Gold Bonds (SGB) are government securities (G-Secs) issued by the Reserve Bank of India (RBI).They are an alternative or substitute to physical gold and are denominated in grams.The Sovereign Gold Bond certificates get issued in multiples of one gram of gold and multiples thereof.
Indian residents like individuals, Hindu undivided families, trusts, universities, and charitable organisations can invest in them. Investments are possible on behalf of the minor by the guardian. Joint holding is applicable as well. SGBs are sold through branches of Nationalised Banks, Scheduled Private Banks, Scheduled Foreign Banks, Post Offices, Stock Holding Corporation of India Ltd., and authentic stock exchanges directly or through their agents.
Traditionally Indian society has a penchant for buying gold ira in physical form both as an investment and for religious reasons. Since their launch in November 2015, there has been a significant drop in the demand for physical gold, favouring Sovereign Gold Bond. The government opened the subscription for the series IX tranche of SGB from January 10, 2022, to January 14, 2022.
The issue price was Rs.4,786 per gram. It also offered a discount of Rs.50 per gram for investors applying online, with the cost being Rs. 4,736
Benefits
Easy storage and safety
The cost of storage and making charges get eliminated. The values of the Gold Bond are in Indian rupees and redeemablein Indian rupees. The bond pricefor buying and selling is fixed based on the three-day moving average price of gold of 999 purityas mentionedon the India Bullion and Jewellers Association.
Certificate of holdings
This gets issued to the investors. You can hold the Sovereign Gold Bond indematerialised form upon specific requests.
Minimum denominations
It is one gram with a maximum ceiling of 4kgs for individuals and HUFs and up to 20kgs for trusts and similar institutions as prescribed by the Government. The limit of 4kgs in the case of joint holders is applicable for the first holder only.
Interest rates
These bonds carry interest ratesof 2.5% annually,which gets credited to the account semi-annually. Interest is taxable; however, no tax gets deducted at the source.
Maturity term
The Sovereign Gold Bond comes with a maturity period of eight years. There is an option for early redemption at the end of the fifth year from the date of issue on the coupon payment.
Capital gains
Upon redemption, they are exempted for Individuals. However, benefit indexation is available for long term capital gains arising on transfer from any person.
Trading
SGBs are tradeable from the date notified by the RBI, only if held in Demat form.
Collateral purpose
You can use Sovereign Gold Bondagainst the Loan, witha value ratio akin to Gold Loans.SGBs are gifted to any relative or friends who fulfil the eligibility criteriabefore maturity by executing a transfer instrument available with the agents. A nomination facility is also available.
Investors who plan to have gold as part of their overall portfolio without the hassle of holding physical goldcan opt for SGBs. Besides the benefits of safety, security, and purity, it gives better returns than physical gold and Gold Exchange-Traded Funds.
Disclaimer – ICICI Securities Ltd. ( I-Sec). Registered office of I-Sec is at ICICI Securities Ltd. – ICICI Venture House, AppasahebMarathe Marg, Prabhadevi, Mumbai – 400 025, India, Tel No : 022 – 6807 7100. I-Sec is acting as a distributor to solicit bond related products. All disputes with respect to the distribution activity, would not have access to Exchange investor redressal forum or Arbitration mechanism. The contents herein above shall not be considered as an invitation or persuasion to trade or invest. I-Sec and affiliates accept no liabilities for any loss or damage of any kind arising out of any actions taken in reliance thereon. Investments in securities market are subject to market risks, read all the related documents carefully before investing. The contents herein mentioned are solely for informational and educational purpose.
