The fourth tranche of the Sovereign Gold Bonds (SGB) is now open for subscription and charges Rs 6,263 per gram. Those who apply online will receive a Rs 50 discount per gram, bringing the issue price to Rs 6,213 per gram. The subscription period for the SGB ends on February 16, and the bonds will be issued on February 21.
Investors are able to make cash payments up to a maximum of Rs 20,000, or use demand draft, cheque, or electronic banking to buy the SGB, as per a report by ET.
The price of the SGB is calculated based on the average closing gold price of 999 purity over the previous three business days, as published by the India Bullion and Jewellers Association Ltd (IBJA). For this tranche, the average price is calculated from February 7 to February 9, 2024.
The Sovereign Gold Bond Scheme was introduced in November 2015 to encourage financial savings and reduce the demand for physical gold. In addition, the RBI has announced the premature redemption of the SGB 2018-19 Series VI bonds at a price of Rs 6,263 per gram, with the redemption price calculated based on the average closing gold price of 999 purity over the previous three business days, from February 7 to February 9, 2024.
Under SGB, investors receive a fixed interest rate of 2.5% per annum, paid semi-annually on the nominal value, which remains unaffected by any changes in the capital value of the Gold Bonds. The benefits of the Sovereign Gold Bond Scheme include an attractive interest with asset appreciation opportunity, redemption linked to gold price, elimination of risk and storage cost, exemption from capital gains tax, tax treatment, tradability, and transferability.
Investors can purchase the SGB through banks, Stock Holding Corporation of India Limited (SHCIL), designated post offices, and recognized stock exchanges. The bonds will be available for purchase within a fortnight of issuance as notified by the RBI.
The introduction of the Sovereign Gold Bond Scheme has not only helped in curbing the demand for physical gold but also promoted financial savings among investors. With the added benefit of attractive interest and exemption from capital gains tax, the SGB is an appealing investment option that allows individuals to own gold without the need for physical possession. This helps in reducing the risks associated with storage and provides a convenient and secure way of investing in gold.
