The fourth tranche of Sovereign Gold Bonds (SGB) is available for subscription today, February 12, at Rs 6,263 per gram. According to the Reserve Bank of India (RBI), the SGB issue will close on Friday, February 16, 2024. The date of SGB issuance has been set as Wednesday, February 21, 2024.
Investors who apply online will receive a discount of Rs 50 per gram, with the issue price remaining at Rs 6,213 per gram. The Sovereign Gold Bonds will be sold via a variety of channels, including post offices, scheduled commercial banks, and stock exchanges. The sovereign gold bonds may be paid for with cash (up to a maximum of Rs 20,000), demand draft, cheque, or electronic banking.
The price of SGB is determined by taking the simple average of the closing 999-purity gold price over the preceding three business days, as reported by the India Bullion and Jewellers Association Ltd (IBJA). The three working days in this instance fall between February 7 and February 9, 2024.
What are the advantages of SGB?
The amount of gold paid for is protected, and the investor can receive the current market price upon redemption or premature redemption. Furthermore, there are no risks or costs associated with storage. There are also no making charges or purity concerns, which exist with gold in jewellery form. The RBI holds the bonds in demat form on its books, so there is no loss of scrip, etc.
The RBI assures investors of the market value of gold at maturity as well as periodic interest. According to the RBI, if the market price of gold falls, the investor may suffer capital loss, but he will not lose the gold in terms of the units he has paid for.
In December 2023, the RBI announced two new issues of the Sovereign Gold Bond Scheme 2023-24, the first in December and the second in February, which is now open for subscription.
SGBs can only be sold to resident individuals, HUFs, Trusts, Universities, and Charitable Institutions. The gold bond is denominated in gram(s) of gold, with one gram serving as the basic unit. These bonds will have an 8-year term with the option of premature redemption after the fifth year, which can be exercised on the date on which interest is payable.
The minimum permissible investment will be one gram of gold, with a maximum subscription limit of 4 kg for individuals, 4 kg for HUF, and 20 kg for trusts and similar entities per fiscal year (April-March) as announced by the government. In the case of joint ownership, the investment limit of 4 kg will apply only to the first applicant.
To decrease the demand for physical gold and convert a portion of domestic savings that were previously used to buy gold into financial savings, the sovereign gold bond programme was introduced in November 2015.
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