Posted On : 2021-03-01
Author : Admin
The Sovereign Gold Bond Scheme will be free for subscription starting from 01 March to 05 March 2021 with an issue price fixed at a nominal value of Rs.4,662 per gram of Gold to which the last date of settlement will be 09th March 2021 as per a statement issued by the Reserve Bank of India on 26th February 2021.
What and Why of Sovereign Gold Bond Scheme?
Sovereign Gold Bond Scheme initially was introduced by the Government of India way back in November 2015, with an intent to reduce the requirement of physical Gold in the domestic market by individual stock holders. It was an effort made by the Government at the Centre on behalf of Reserve Bank of India to transform household savings in the form of gold into financial savings. Gold Bonds are excellent substitutes for converting physical Gold holdings into Financial savings, 10 such tranches of Sovereign Gold Bonds (SGB) have already been launched by the RBI during the year 2019-2020 aggregating nearly 6.13 tonnes of gold, valuing at Rs.2113.46 crores.
How are they priced?
The issue price of SGB is set in Indian Rupees and is calculated on the basis of simple average of Closing Price* of Gold for the last 3 working days of the week prior to the Subscription Time i.e. Feb 24, 25, 26, 2021. The nominal Bond value is denominated in multiples of Gold grams, the price for series XII is Rs.4662 per gram of Gold.
Further, the Government in consultation with RBI declared that these Gold Bonds will be available at a discounted price, for the subscribers who apply for the Bond online and make digital payments at a Rs.50 per gram lesser rate. This implies that cost for online bookings and digital transfer of payments will be Rs.4,612 only for each gram of Gold.
*Price published by the India Bullion and Jeweller Association Limited (IBJA) for 999 purity of Gold is considered standard.
Minimum and maximum limits for investments:
The permissible investment limit for the SGB starts from a minimum of 1 gram Gold to a maximum limit of 4 KG for an individual investor. This limit shall hold good for a HUF nominee as well but entities like trusts and other similar bodies may subscribe up to a maximum of 20 KG for each fiscal year starting from April to March.
On the whole, SGB is ideal for investors with low appetite of risk taking, they have an added advantage of Indexation, provide income in the form of interests, can be used as a collateral security at the time of need and can be effortlessly traded.
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