The subscription for Sovereign Gold Bonds 2023-24 Series III will be open for a period of five trading days, starting from December 18 and ending on December 22. The bonds are scheduled to be issued on December 28, 2023. The price for this issue will be announced by the Reserve Bank of India (RBI) soon.
The Reserve Bank of India (RBI) is yet to disclose the issue price for SGB 2023-24 Series III. The price of these bonds is determined based on the simple average of the closing price of gold with 999 purity, as published by the India Bullion and Jewellers Association (IBJA). This average is calculated using the closing prices of gold for the three working days prior to the start of the subscription period.
What are Sovereign Gold Bonds?
Sovereign Gold Bonds (SGBs) are government securities denominated in grams of gold. They serve as substitutes for owning physical gold. Investors must pay the issue price in cash and will receive a cash redemption upon maturity. The Reserve Bank of India issues the bonds on behalf of the Government of India.
Investors are protected as they will receive the market price of gold upon redemption, ensuring the value of the quantity of gold they initially paid for. SGBs offer a more advantageous alternative to holding physical gold.
Who can invest in Sovereign Gold Bonds ?
SGBs can be invested by individuals who are classified as residents in India according to the Foreign Exchange Management Act, 1999. This includes individuals, Hindu Undivided Families (HUFs), trusts, universities, and charitable institutions.
In the case of individual investors who later change their residential status from resident to non-resident, they are allowed to hold the SGB until early redemption or maturity.
What is the SGBs rate of interest and how will the interest be paid?
The SGBs have a fixed interest rate of 2.50% per annum on the initial investment amount. The interest will be credited semi-annually to the investor’s bank account, with the last interest payment being made upon maturity along with the principal amount invested.
What is the limit for investment in SGBs?
The minimum investment in SGBs is 1 gram, and the bonds are issued in denominations of one gram or multiples thereof. For individuals, the maximum limit for subscription is 4 kg per fiscal year (April-March). The same limit of 4 kg applies to HUF investors. However, for trusts and similar entities notified by the government, the maximum limit is 20 kg per fiscal year.
If the investment is made jointly, the maximum limit applies to the first applicant. The annual investment limit includes bonds purchased during the initial issuance by the government as well as those acquired from the secondary market. It’s worth noting that the investment limit does not include holdings as collateral by banks and other financial institutions.
How to buy Sovereign Gold Bonds online?
To purchase SGBs online, you have two options: the secondary market or the primary issuance. For buying SGBs in the secondary market, you can visit either the BSE or NSE websites and make the purchase online. It is worth noting that online purchases often come at a discounted rate of Rs. 50 compared to the nominal price.
For the primary issuance, scheduled commercial banks offer the facility to buy SGBs. Here is a step-by-step guide to buying gold bonds online in India:
1. Log in to your net banking account.
2. Select the ‘eServices’ option and then choose ‘Sovereign Gold Bond’.
3. Read and agree to the terms and conditions, then select ‘Proceed’.
4. Fill out the registration form with the required details and click ‘Submit’.
5. In the purchase form, enter the quantity you wish to subscribe to and provide the nominee’s details.
6. Once all the necessary details are provided, select ‘Submit’.
Investing in gold, whether through SGBs or other forms, carries the inherent risk of potential losses if the market price of gold declines. This risk is not exclusive to SGBs but applies to all gold investments.
However, it is important to note that the RBI guarantees that investors will not suffer losses in terms of the quantity of gold they were allocated. This assurance ensures that the investor’s initial investment in terms of gold remains protected.
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Published: 15 Dec 2023, 05:37 PM IST