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Sovereign Gold Bond (SGB)

 

Sovereign Gold Bond (SGB) 2017-18

 

Product name

Sovereign Gold Bond 2017-18

Issuance

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

Issue

The issue is opened from 9th October 2017 to 27th December 2017 on 3 days in a week basis i.e. The issue shall be opened on Monday, Tuesday and Wednessday in every week from 9th October to 27th December 2017.

Eligibility

The Bonds will be restricted for sale to resident Indian entities including individuals, HUFs, Trusts, Universities and Charitable Institutions.

Denomination

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

Maximum limit

The maximum limit of subscribed shall be 4 KG for individual, 4 Kg for HUF and 20 Kg for trusts and similar entities per fiscal (April-March) notified by the Government from time to time. A self-declaration to this effect will be obtained. The annual ceiling will include bonds subscribed under different tranches during initial issuance by Government and those purchased from the Secondary Market.

Joint holder

In case of joint holding, the investment limit of 4 KG will be applied to the first applicant only.

Issue price

Price of Bond will be fixed in Indian Rupees on the basis of simple average of closing price of gold of 999 purity published by the India Bullion and Jewellers Association Limited for the last 3 business days of the week preceding the subscription period. The issue price of the Gold Bonds will be ` 50 per gram less for those who subscribe online and pay through digital mode.

Payment option

Payment for the Bonds will be 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 Stocks 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 simple average of closing price of gold of 999 purity of previous 3 business days published by IBJA.

Sales channel

Bonds will be sold through banks, Stock Holding Corporation of India Limited (SHCIL), designated post offices as may be notified and recognized stock exchanges viz., National Stock Exchange of India Limited and Bombay Stock Exchange, either directly or through agents.

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 Gold Bonds shall be taxable as per the provision of 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 within a fortnight of the issuance on a date as notified by the RBI.

SLR eligibility
Issue

The Bonds will be eligible for Statutory Liquidity Ratio purposes.
The issue is opened from 9th October 2017 to 27th December 2017 on 3 days in a week i.e. The issue shall be opened on Monday, Tuesday and Wednessday in every week from 9th October to 27th December 2017.