Sovereign Gold Bond Scheme 2015 – Information you should know
The Government of India introduced the Sovereign Gold Bond (SGB) Scheme in November 2015, to offer investors an alternative to physical gold. Over the years, the market has witnessed a considerable decline in the demand for physical gold. SGBs are government securities and are considered safe.
If you are looking to purchase an SGB, all you have to do is approach a SEBI authorized agent or broker. When you redeemed the bond, the corpus (as per the current market value) will be deposited into your registered bank account.
Objective of Sovereign Gold Bond
India has an estimated 20,000 tonnes of gold lying idle with Indian households and institutions. Sovereign Gold Bond schemes aimed at bringing the gold lying with citizens into the economy, and reducing India’s dependence on gold imports.
Features of Gold Bond Scheme
- SGBs are government securities denominated in grams of gold, wherein the basic unit is 1 gram. The minimum initial investment is 1 gram of gold, and the upper limit is 4 Kg of gold per individual investor. For entities such as trusts and universities, 20 Kg of gold is permissible. Investors have to pay the issue price in cash and the bonds will be redeemed in cash on maturity.
- Sovereign Gold Bond Scheme has a tenure of 8 years which can be withdrawn prematurely after 5 years on interest payment dates.
- The Bond is issued by Reserve Bank on behalf of Government of India. They are substitutes for holding physical gold.
- The Bonds bear interest at the rate of 2.50 per cent (fixed rate) per annum on the amount of initial investment. Interest will be credited semiannually to the bank account of the investor and the last interest will be payable on maturity along with the principal.
- These Gold bonds can be purchased through multiple payment modes such as cheques, cash, DDs or electronic transfer.
- The Sovereign Gold Bond Scheme was launched under the Gold Monetization Scheme 2015.
Who may invest in Sovereign Gold Bond?
As a low-risk investment, it is perfect for investors with a low-risk appetite. As investor will get a guaranteed return of 2.5% plus current value of gold at the time of maturity.
Those who want to invest in gold and do not want to take any risk of storing physical gold can also go for SGBs. This is because it is easy to store this in Demat form, and nobody can steal it as they are in electronic form.
Who can apply for Sovereign Gold Bond
➖ Any individual/association/trusts/HUFs having an Indian residency is eligible to invest in the Sovereign Gold Bond scheme. They can also jointly invest in these gold bonds as the eligibility criteria of the scheme.
➖ The benefits of this scheme can also be availed by the minors provided this bond is purchased by the parents on their behalf.
Where to buy Sovereign Gold Bond
Investors can apply for the bonds through scheduled commercial banks and designated post offices. NBFCs, National Saving Certificate (NSC) agents and others, can act as agents and they are also traded on the Stock Exchange.