Sovereign Gold Bond scheme: February 16 last day to subscribe; here's all you need to know

The Sovereign Gold Bond (SGB) 2023-2024 Series IV is currently open for subscription until tomorrow, February 16, 2024. This scheme was initiated by the government in 2015 to divert investments from physical gold into financial savings.

How can investors subscribe to the Sovereign Gold Bond?

Investors can subscribe to the SGB at Rs 6,263 per gram, with a Rs 50 discount per gram available for those who invest online. The issue price is slightly lower than the current gold price, which stands at Rs 6,294 per gram for 999 purity gold.

What is the current international gold market situation?

International gold prices are relatively stable, standing at $2018.71 per ounce as of 0424 GMT. This stability precedes US inflation data, which could influence the Federal Reserve's decision on interest rates. On the MCX, the April gold futures contract is trading slightly higher at Rs 6,209 per 10 grams.

How might future events impact gold prices?

The uncertainty surrounding the timing of interest rate cuts by the US central bank could lead to corrections in gold prices. Dollar gains may limit short-term gains in gold prices.

What are the issuance details of the Sovereign Gold Bonds?

The Government of India, in collaboration with the Reserve Bank of India, plans to issue Sovereign Gold Bonds in specified tranches. Tranche 2023-24 Series III was issued from December 18 to December 22, 2023, with issuance on December 28, 2023. Tranche 2023-24 Series IV's subscription period is from February 12 to February 16, 2024, with issuance on February 21, 2024.

What are the eligibility criteria and features of the Sovereign Gold Bonds?

Eligibility: SGBs are available for sale to resident individuals, HUFs, Trusts, Universities, and Charitable Institutions.

Denomination: Bonds are denominated in multiples of grams, with a basic unit of one gram.

Tenor: The tenor of the SGB is eight years, with an option for premature redemption after the fifth year.

Minimum and Maximum Limits: The minimum investment is one gram, with a maximum limit of 4 kg for individuals, HUFs, and 20 kg for trusts and similar entities per fiscal year.

Issue Price: The price is based on the average closing price of gold for the last three working days preceding the subscription period.

Payment Options: Payments can be made through cash (up to Rs 20,000), demand draft, cheque, or electronic banking.

Interest Rate: Investors receive a fixed rate of 2.50% per annum, payable semi-annually.

Collateral: SGBs can be used as collateral for loans, subject to applicable loan-to-value ratios.

KYC Documentation: Standard KYC norms apply, including documents such as Voter ID, Aadhaar card/PAN, Passport, etc.

Tax Treatment: Interest on SGBs is taxable, but capital gains tax on redemption is exempted.

Tradability: SGBs are eligible for trading.

SLR Eligibility: SGBs acquired by banks can be counted towards Statutory Liquidity Ratio.

Commission: Distribution commissions are applicable and are paid at a specified rate.

Where can investors purchase Sovereign Gold Bonds?

SGBs are available through scheduled commercial banks, designated post offices, recognized stock exchanges, and specific corporations like SHCIL and CCIL.

By addressing these questions, we can provide a comprehensive overview of the Sovereign Gold Bond Scheme and its associated features.