SGBs are the government securities dominated in grams of gold. You can say it is like the substitutes of holding physical gold. If you want to buy you have to pay the issue price in cash and the bond will be redeemed in cash on maturity. This bond is issue by Reserve Bank on behalf of Government of India.
Government of India has vide its Notification F.No. 4(8)-(W&M)/2017 dated April 20, 2017 announced that the Sovereign Gold Bonds 2017-18-Series I (“the Bonds”) will be open for subscription from April 24, 2017 to April 28, 2017. The Government of India may, with prior notice, close the Scheme before the specified period.
Why should you buy Sovereign Gold Bond ?
Quantity of gold for which you pay is completed protected and you will get the ongoing market price at the time of redemption/premature redemption. You can say SGB is an alternative to hold gold in physical form, Risk and cost of storage is also 100% eliminated. SGB is free from issues like making charge and doubt of impurity in case of gold in jewellery form. The bonds are held in the books of the RBI or in demat form eliminating risk of loss of scrip etc. Fixed lock in period of this bond is just 8 year but you can also made premature redemption on 5th, 6th and 7th year. You can also apply for loan against this bond. You will also earn 2.50% assured interest per annum on the issue price.
Eligibility of buying Sovereign Gold Bond
Individuals who want to enroll in the Sovereign Gold Bond Scheme need to satisfy the following simple eligibility criteria.
- Indian resident – This scheme is open only to Indian residents, with the Foreign Exchange Management Act of 1999 formulating the eligibility criteria.
- Individuals/groups – Individuals, associations, trusts, HUFs, etc. are all eligible to invest in this scheme, provided they are Indian residents. Under the scheme, one can jointly invest in bonds with other eligible members.
- Minors – This bond can be purchased by guardians or parents on behalf of minors.
Maximum or Minimum amount of investment required to enroll in Sovereign Gold Bond
The Bonds shall be denominated in units of one gram of gold and multiples thereof. Minimum investment in the Bonds shall be one gram with a maximum limit of subscription of five hundred grams per person per fiscal year (April – March).
