Sovereign Gold Bond scheme opens today: Things you need to know; check price, limit

The second tranche of the Sovereign Gold Bond scheme opens today. It will be open for subscription from August 22 to August 26. The government is also offering a discount of Rs 50 per gram less than the nominal value for those applying online. The Reserve Bank of India (RBI) said in a statement that the nominal value of the bond works out to be Rs 5,197 per gram of gold. 

“The Sovereign Gold Bond Scheme 2022-23 - Series II will be open for subscription for the period from August 22 – August 26, 2022. The nominal value of the bond based on the simple average closing price [published by the India Bullion and Jewellers Association Ltd (IBJA) for gold of 999 purity of the last three working days of the week preceding the subscription period, i.e. August 17, August 18, and August 19, 2022 works out to Rs 5,197/- (Rupees Five thousand one hundred and ninety seven only) per gram of gold,” the RBI added. 

“Government of India, in consultation with the Reserve Bank of India, has decided to offer a discount of 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. For such investors, the issue price of Gold Bond will be Rs 5,147/- (Rupees Five thousand one hundred and forty seven only) per gram of gold,” it said. 

The State Bank of India also posted a tweet on the Sovereign Gold Bonds. ”Don't miss out on this golden opportunity! SOVEREIGN GOLD BONDS SCHEME 2022-23 SERIES – II opens from 22 Aug to 26 Aug.”

What are Sovereign Gold Bonds? 

Sovereign Gold Bonds aka SGBs are issued by the RBI on behalf of the government. These are government securities, an alternative to physical gold, and are issued a couple of times in a financial year. There is a lock-in period of 8 years for the scheme, with an exit option in the 5th, 6th and 7th year, to be exercised on the interest payment dates.

The SGBs can be used as collateral for loans. 

How to invest in SGBs?

All interest will have to pay the price in cash, and can be redeemed in cash upon maturity. The final amount will be based on the ongoing market price, along with the interest. 

The interest fetched on these bonds is 2.50 per cent per annum on the initial amount invested. The interest is received semi-annually. The last interest is paid along with the principal amount. 

The SBI stated that the gold bonds will be issued as government stocks under the Government Security Act, 2006. The investors will be issued a Holding Certificate, and the SGBs will eligible for conversion into Demat form.The Sovereign Gold Bonds will be tradable on stock exchanges within a fortnight of the issuance on a date.

What is the minimum and maximum limit for SGBs?

Sovereign Gold Bonds are sold in denominations of a gram of gold and multiples. 

The minimum investment is 1 gram, while the maximum can of 4 kg for individuals and Hindu Undivided Family (HUF). 

Trusts, institutions and other entities can buy up to 20 kg in a fiscal year.

Who is eligible to buy SGBs?

Sovereign Gold Bonds can be bought by any resident of India. If the residential status is changed to non-resident after purchasing, then he or she can hold the book till maturity. 

How to buy Sovereign Gold Bonds?

SGBs are available at stock exchanges, scheduled commercial banks, post offices, RBI website, Stock Holding Corporation of India Limited (SHCIL). 

Also read: Sovereign Gold Bonds: How do you buy SGBs and what's the lock-in period?