Sovereign Gold Bond

What are Sovereign Gold Bonds (SGB)?

  • One of the latest investment innovations is SGBs or Sovereign Gold Bonds. The Sovereign Gold Bond Scheme was launched by the government in November 2015. Investing in gold is much easier and more convenient now with SGBs.
  • As an investor, you can earn an assured interest rate (2.5% per annum at present). You also eliminate risk and cost of storage. The redemption is linked to the gold price prevailing at the time of redemption. Also, SGBs are exempt from the capital gains tax, if held till maturity.
  • Its features include the tenure of 8 years with an option to exit from the 5th year. A holding certificate is issued towards investment in bonds. The customers will be issued a certificate of holding on the date of issuance of the SGB. Certificate of holding can be collected from the branches or is sent directly to e-mail ID from RBI, if the e-mail ID is provided in the application form. Certain banks offer the convenience of SGB investing online. An even better option is to subscribe and hold the SGB in demat form. For this, the applicant has to mention the details of DP ID and DP Client ID in the application form.
  • Under the scheme, the issues are made open for subscription in tranches by RBI in consultation with the government. The RBI notifies the terms and conditions for the scheme from time to time. The subscription for SGB will be open as per a calendar. The rate of SGB interest is declared by RBI before every new tranche by issuing a press release.
  • As per RBI instructions, every application must be accompanied by the ‘PAN’ issued by the Income Tax Department to the investor. Know-your-customer (KYC) norms are the same as that for purchase of physical gold. KYC documents such as Voter ID, Aadhaar card/PAN or Passport will be required during application time.

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