· The Government of
India, in consultation with the Reserve Bank of India, has decided to issue
Sovereign Gold Bonds (SGBs) in tranches as per the calendar specified below:
· The SGBs will be sold
through Scheduled Commercial banks (except Small Finance Banks, Payment
Banks and Regional Rural Banks), Stock Holding Corporation of India Limited
(SHCIL), Clearing Corporation of India Limited (CCIL), designated post offices,
and recognised stock exchanges viz., National Stock Exchange of India
Limited and Bombay Stock Exchange Limited.
· The features of the
Bond are as under:
|
Sl. No. |
Item |
Details |
|
1 |
Product name |
Sovereign Gold Bond Scheme 2023-24 |
|
2 |
Issuance |
To be issued by the 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
for individual, 4 Kg for HUF and 20 Kg for trusts and similar entities per
fiscal year (April-March) notified by the Government from time to time. A
self-declaration to this effect will be obtained from the investors at the
time of making an application for subscription. The annual ceiling will
include SGBs subscribed under different tranches, and those purchased from
the secondary market, 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 Scheduled Commercial
banks (except Small Finance Banks, Payment Banks and Regional Rural
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 per cent per annum payable semi-annually on the nominal value. |
|
15 |
Collateral |
The SGBs can be used as collateral for loans. The
loan-to-value (LTV) ratio will be as applicable to any 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 the SGB. |
|
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 per cent of the total subscription received by the
receiving offices and receiving offices shall share at least 50 per cent of
the commission so received with the agents or sub agents for the business
procured through them. |
|
Test
Yourself
Prelims
Practice MCQs Q. What is/are the
purpose/purposes of Government’s ‘Sovereign Gold Bond Scheme’ and ‘Gold
Monetization Scheme’? (Prelims 2016) 1. To bring the idle gold lying with Indian households into the economy. 2. To promote FDI in the gold and jewellery sector. 3. To reduce India’s dependence on gold imports. Select the correct
answer using the code given below: (a) 1 only (b) 2 and 3 only (c) 1 and 3 only (d) 1, 2 and 3
Answer C
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