Sovereign Gold Bond Scheme 2022-23: Key dates of series 1, 2 tranche, subscription, issuance, and other important details

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Details

1

Product name

Sovereign Gold Bond Scheme 2022-23

2

Issuance

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

3

Eligibility

The SGBs will be restricted for sale to resident individuals, HUFs, Trusts, Universities and Charitable Institutions.

4

Denomination

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

5

Tenor

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

6

Minimum size

Minimum permissible investment will be One gram of gold.

7

Maximum limit

The maximum limit of subscription shall be 4 KG forindividual, 4 Kg for HUF and 20 Kg for trusts andsimilarentities per fiscal year (April-March) notified by the Governmentfrom time to time. A self-declaration to this effect will beobtained. The annual ceiling will include SGBs subscribed under different tranches, and those purchased from the SecondaryMarket, during the fiscal year.

8

Joint holder

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

9

Issue price

Price of SGB 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 (IBJA) for the last three working days of the week preceding the subscription period. The issue price of the SGBs will be less by ` 50 per gram for the investors who subscribe online and pay through digital mode.

10

Payment option

Payment for the SGBs will be through cash payment (upto a maximum of `20,000) or demand draft or cheque or electronic banking.

11

Issuance form

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

12

Redemption price

The redemption price will be in Indian Rupees based on simple average of closing price of gold of 999 purity, of previous three working days published by IBJA Ltd.

13

Sales channel

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

14

Interest rate

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

15

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.

16

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. Every application must be accompanied by the ‘PAN Number’ issued by the Income Tax Department to individuals and other entities.

17

Tax treatment

The interest on SGBs 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 is exempted. The indexation benefits will be provided to long term capital gains arising to any person on transfer of bond.

18

Tradability

SGBs shall be eligible for trading.

19

SLR eligibility

SGBs acquired by the banks through the process of invoking lien/hypothecation/pledge alone, shall be counted towards Statutory Liquidity Ratio.

20

Commission

Commission for distribution of the bond shall be paid at the rate of  one percent of the total subscription received by the receiving offices and receiving offices shall share at least 50 percent of the commission so received with the agents or sub agents for the business procured through them.