Government of India Announces Sovereign Gold Bonds (SGBs) Tranche Issuance in December and February

Key Takeaways:

1. Tranche Details: Series III subscription scheduled for December 18-22, 2023, and Series IV for February 12-16.

2. Sale Channels: SGBs will be sold through scheduled commercial banks, SHCIL, CCIL, designated post offices, NSE, and BSE.

3. Pricing: SGB price fixed in Indian rupees based on the average closing price of gold of 999 purity.

4. Discounts: Online and digital mode subscribers receive a Rs 50 per gram discount on the issue price.

5. Interest and Limits: Investors compensated at 2.50% per annum, with maximum subscription limits for individuals, HUFs, and trusts.

6. Tenor and Redemption: Eight-year tenor with an option of premature redemption after the 5th year.

7. Issuer and Use: RBI issues the bonds on behalf of the Government of India, and the bonds can be used as collateral for loans.

Sovereign Gold Bonds (SGBs) Tranche Issuance

The Government of India has announced the issuance of sovereign gold bonds (SGBs) in December and February. The SGBs are aimed at reducing the demand for physical gold and encouraging the shift of domestic savings from the purchase of gold to financial savings. Here are the key details regarding the issuance of SGBs:

Tranche Details

Series III: The subscription for the 2023-24 Series III is scheduled to take place from December 18-22, 2023.

Series IV: The subscription for the 2023-24 Series IV is scheduled for February 12-16.

Sale Channels

The SGBs will be sold through various channels, including scheduled commercial banks, Stock Holding Corporation of India Limited (SHCIL), Clearing Corporation of India Limited (CCIL), designated post offices, National Stock Exchange of India Limited, and Bombay Stock Exchange Limited.

Pricing

The price of the SGB will be fixed in Indian rupees based on the simple average of the closing price of gold of 999 purity, published by the India Bullion and Jewellers Association Limited (IBJA) for the last three working days of the week preceding the subscription period.

Investors who subscribe online and pay through digital mode will receive a discount of Rs 50 per gram on the issue price.

Interest and Subscription Limits

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

The maximum limit of subscription is set at 4 kg for individuals, 4 kg for Hindu Undivided Families (HUF), and 20 kg for trusts and similar entities per fiscal year.

Tenor and Redemption

The tenor of the SGB will be eight years with an option of premature redemption after the 5th year, to be exercised on the date on which interest is payable.

The Reserve Bank of India issues the bonds on behalf of the Government of India, and the bonds can be used as collateral for loans.

Know Your Customer (KYC) norms for the purchase of SGBs will be the same as those for the purchase of physical gold.

FAQ

Q1: What are Sovereign Gold Bonds (SGBs)?

A1: SGBs are government securities denominated in grams of gold, issued by the Reserve Bank of India on behalf of the Government of India.

Q2: How are SGBs priced?

A2: The price of SGBs is fixed in Indian rupees based on the simple average of the closing price of gold of 999 purity, published by the India Bullion and Jewellers Association Limited (IBJA) for the last three working days of the week preceding the subscription period.

Q3: What is the maximum subscription limit for SGBs?

A3: The maximum limit of subscription is set at 4 kg for individuals, 4 kg for Hindu Undivided Families (HUF), and 20 kg for trusts and similar entities per fiscal year.