Sovereign Gold Bonds 2023-24 Series III: All You Need to Know

Sovereign Gold Bonds (SGBs) are government securities denominated in grams of gold. They are substitutes for holding physical gold. Investors have to pay the issue price in cash and the bonds will be redeemed in cash on maturity. The Bond is issued by the Reserve Bank on behalf of the Government of India.

The Reserve Bank of India (RBI) has set the issue price at Rs 6,199 per gram for gold bonds with purity in the latest tranche of the Sovereign Gold Bond 2023-24 scheme, which will open for subscription on Monday. Investors can apply until December 22.

Eligibility Criteria

Persons resident in India as defined under Foreign Exchange Management Act, 1999 are eligible to invest in Sovereign Gold Bonds 2023-24 Series III. Eligible investors include individuals, HUFs, trusts, universities and charitable institutions. 

Individual investors with subsequent change in residential status from resident to non-resident may continue to hold SGB till early redemption/maturity, as per Reserve Bank of India.

Minimum & Maximum Limit For Investment

Investors can purchase the Bonds in denominations of one gram of gold or multiples thereof. The minimum investment allowed in the Bond is one gram, with a maximum subscription limit of 4 kg for individuals, 4 kg for Hindu Undivided Family (HUF), and 20 kg for trusts and similar entities as notified by the government per fiscal year (April – March). 

If there’s joint holding, the limit applies to the first applicant. The annual ceiling encompasses bonds subscribed under different tranches during the initial issuance by the Government and those acquired from the secondary market. The investment ceiling excludes holdings used as collateral by banks and other financial institutions.

Rate of interest & how will the interest be paid?

The Bonds bear interest at the rate of 2.50 percent (fixed rate) per annum on the amount of initial investment. Interest will be credited semi-annually to the bank account of the investor and the last interest will be payable on maturity along with the principal amount.

Authorized agencies selling Sovereign Gold Bonds

Bonds are sold through offices or branches of Nationalised Banks, Scheduled Private Banks, Scheduled Foreign Banks, designated Post Offices, Stock Holding Corporation of India Limited (SHCIL) and the authorised stock exchanges either directly or through their agents.

How to Apply Online to Sovereign Gold Bonds?

A customer can apply online to the SGB 2023-24 tranche III through the website of the listed scheduled commercial banks. The issue price of the Gold Bonds will be Rs 50 per gram less than the nominal value to those investors applying online and the payment against the application is made through digital mode.

Investors have multiple options to purchase these bonds, including buying them through net banking on banks’ mobile applications. Additionally, the SGBs are available for purchase on the RBI Retail Direct website.

What is the Selling Price of SGB?

The nominal value of Gold Bonds shall be in Indian rupees fixed on the basis of simple average of closing price of gold of 999 purity, published by the India Bullion and Jewelers Association Limited, for the last 3 business days of the week preceding the subscription period.

Can the bond be cashed anytime or is premature redemption allowed?

While the bond’s tenor spans eight years, it can be redeemed before maturity starting from the fifth year on coupon payment dates. Additionally, if held in demat form, the bond can be traded on exchanges. It can also be transferred to any other eligible investor.

Are these securities allowed as collateral for loans?

These securities are eligible to be used as collateral for loans from banks, financial Institutions and Non-Banking Financial Companies (NBFC). The Loan to Value ratio will be the same as applicable to ordinary gold loans prescribed by RBI from time to time. Granting loan against SGBs would be subject to the decision of the bank/financing agency. It cannot be inferred as a matter of right, as per RBI.

Sovereign Gold Bond 2023-24: Is TDS applicable?

TDS is not applicable on the bond. However, it is the responsibility of the bond holder to comply with the tax laws.

Payment options for investing in the Sovereign Gold Bonds

Payment can be executed via cash, acceptable up to Rs 20,000. This can also be done through methods such as cheques, demand drafts, or electronic fund transfers.

Is a nomination facility available for these investments?

Nomination facility is available as per the provisions of the Government Securities Act 2006 and Government Securities Regulations, 2007. A nomination form is available along with an Application form. 

An individual Non – resident Indian may get the security transferred in his name on account of his being a nominee of a deceased investor provided that the Non-Resident investor shall need to hold the security till early redemption or till maturity and the interest and maturity proceeds of the investment shall not be repatriable.

Is the Sovereign Gold Bond available in Demat form?

Investors can hold the bonds in a demat account by making a specific request in the application form itself. Until the dematerialization process is finished, the bonds will be held in RBI’s books. The facility for conversion to demat will also be available subsequent to allotment of the bond.

Contact information to address queries regarding Sovereign Gold Bond

A dedicated e-mail has been created by the Reserve Bank of India to receive queries from members of the public on Sovereign Gold Bonds. Investors can mail their queries to this email id.

_{Disclaimer: The information provided in this blog post is for informational purposes only and should not be construed as investment or trading advice. The author is not a financial advisor and does not have any professional qualifications in this area. The author does not guarantee the accuracy or completeness of the information provided. Any action you take based on the information in this blog post is done at your own risk. Please consult with a financial advisor before making any investment decisions.}