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Sovereign Gold Bond (SGB)

 

Sovereign Gold Bond (SGB) 2017-18 Series – II (9th Tranche)

 

Product name

Sovereign Gold Bond (SGB) 2017 -18 – Series II

Issuance

To be issued by Reserve Bank India on behalf of the Government of India.

Application

Request for the Bonds are accepted at Banks all Indian Branches (except specialized branches).  

Eligibility

The Bonds under this Scheme may be held by a person resident in India, being an individual, in his capacity as such individual, or on behalf of minor child, or jointly with any other individual. “Person resident in India” is defined under section 2(v) read with section 2 (u) of the Foreign Exchange Management Act, 1999. Accordingly, The Bonds will be restricted for sale to resident Indian entities including individuals, HUFs, Trusts, Universities, charitable institutions.

Denomination

The Bonds will be denominated in multiples of gram(s) of gold with a basic unit of 1 (One) gram.

Tenor

The tenor of the Bond will be for a period of 8 years with exit option from 5th year to be exercised on the interest payment dates

Minimum size

Minimum permissible investment will be 1 (one) gram of gold.

Maximum limit

The maximum amount subscribed by an entity will not be more than 500 grams per person per fiscal year (April-March). A self-declaration to this effect will be obtained.

Joint holder

In case of joint holding, the investment limit of 500 grams will be applied to the first applicant only

 

 

Issue price

Issue price for the present 8th tranche of SGB 2017 – 18 – Series -II is Rs. 2780/- per gram after Rs. 50/- discount on Nominal Value of Rs. 2830/- per gram.

Payment option

Payment for the bonds will be accepted through Cash Payment (upto a maximum of Rs. 20,000/-) or Demand draft or cheque or electronic banking.

Issuance form

The Gold Bonds will be issued as Government of India Stock under GS Act, 2006. The investors will be issued a Holding Certificate for the same. The Bonds are eligible for conversion into demat form.

Redemption price

The redemption price will be in Indian Rupees based on previous week’s (Monday-Friday) simple average of closing price of gold of 999 purity published by IBJA

Interest rate

The investors will be compensated at a fixed rate of 2.50 per cent per annum payable semi-annually on the nominal value.

Collateral

Bonds can be used as collateral for loans. The loan-to-value (LTV) ratio is to be set equal to ordinary gold loan mandated by the Reserve Bank from time to time.

KYC Documentation

Know-your-customer (KYC) norms will be the same as that for purchase of physical gold. KYC documents such as Voter ID, Aadhaar card / PAN or TAN / Passport will be required.

Tax treatment

The interest on the Gold Bond shall be taxable as per the provisions of the Income-tax Act, 1961 (43 of 1961). The capital gains tax arising on redemption of SGB to an individual has been exempted. The indexation benefits will be provided to long term capital gains arising to any person on transfer of bond

Tradability

Bonds will be tradable on stock exchanges on such a date as notified by the RBI.

SLR Eligibility The Bonds will be eligible for Statutory Liquidity Ratio purpose.