Sovereign Gold Bond - Got a query

The quantity of gold for which the investor pays is protected, since he receives the ongoing market price at the time of redemption/ premature redemption. SGBs offer a more convenient alternative to holding gold in physical form. Additionally the risks and costs of storage are eliminated. Investors are assured of the market value of gold at the time of maturity and also earn periodical interest. SGBs are free from issues such as making charges and purity as in the case of gold in jewellery form. These bonds are held in the books of the RBI or in demat form eliminating risk of loss of scrip etc.

Persons resident in India as defined under Foreign Exchange Management Act, 1999 are eligible to invest in SGB. Eligible investors include individuals, HUFs, trusts, universities and charitable institutions. Individual investors with subsequent change in residential status from resident to non-resident may continue to hold SGBs till early redemption/maturity. However they cannot invest in new ones.

Yes, joint holding is allowed.

Yes, a minor can invest in SGBs however, the application on behalf of the minor has to be made by his/her guardian.

The application form will be provided by the bank. It can also be downloaded from the RBI’s website. Axis Bank also offers you the avenue to apply for Sovereign Gold Bonds online. You can begin your journey here.

Every application must be accompanied by the investor(s) ‘PAN Number’ issued by the Income Tax Department.

No. An investor can have only one unique investor Id linked to any of the prescribed identification documents. The unique investor ID is to be used for all the subsequent investments in the scheme. For holding securities in dematerialized form, quoting of PAN in the application form is mandatory.

Sovereign Gold Bonds are issued in denominations of one gram of gold and in multiples thereof. Minimum investment in the Bond shall be one gram with a maximum limit of 4 kg for individuals and Hindu Undivided Families (HUFs) and 20 kg for trusts and similar entities notified by the government from time to time per fiscal year (April – March). In case of joint holding, the limit applies to the first applicant. The annual ceiling will include bonds subscribed under different tranches during initial issuance by Government and those purchased from the secondary market. The ceiling on investment will not include the holdings as collateral by banks and other Financial Institutions

Yes, each family member can buy the bonds in his/her own name if they satisfy the eligibility criteria.

Yes. An investor/trust can buy 4 Kg/20 Kg worth of gold respectively every year as the ceiling has been fixed on a fiscal year (April-March) basis.

The maximum limit will be applicable to the first applicant in case of a joint holding for that specific application. The Second applicant can additionally invest in SGBs up to 4kg for that financial year.

Sovereign Gold Bonds acquire interest at the fixed rate of 2.50% (as declared annually by Govt. of India – Ministry of Finance) per annum on the amount of initial investment. Interest will be credited semi-annually to the bank account of the investor and the last interest will be payable on maturity along with the principal.

Certain Banks/SHCIL offices/Post Offices/Designated stock exchanges/agents have been authorised by the RBI to process the sale of Sovereign Gold Bonds. Axis Bank as one of these authorised sellers gives you the option to invest in SGBs across all its branches as well as digitally. You can begin your application for online investment here. Or locate you nearest Axis Bank Branch here.

If the customer meets the eligibility criteria, produces a valid identification document and remits the application money on time, he/she will receive the allotment.

The customers will be issued Certificate of Holding on the date of issuance of the SGB. Certificate of Holding can be collected from the bank or obtained directly from RBI via email, if the email address is provided in the application form.

Yes. You can apply online through the bank’s website / Retail Internet Banking. The issue price of the Gold Bonds will be ₹ 50 per gram less than the nominal value for investors applying online and using digital modes of payment against the application.

The nominal value of Gold Bonds shall be in Indian Rupees fixed on the basis of simple average of closing price of gold of 999 purity, published by the India Bullion and Jewelers Association Limited, for the last 3 business days of the week preceding the subscription period.

The price of gold for the relevant tranche will be published on RBI website two days before the issue opens.

On maturity, the Gold Bonds shall be redeemed in Indian Rupees and the redemption price shall be based on simple average of closing price of gold of 999 purity of previous 3 business days from the date of repayment, published by the India Bullion and Jewelers Association Limited.

Both interest and redemption proceeds will be credited to the bank account furnished by the customer at the time of buying the bond.

The investor will be advised one month before maturity regarding the ensuing maturity of the bond. On the date of maturity, the maturity proceeds will be credited to the bank account as per the details on record. In case there are changes in any details, such as, account number, email ids, then the investor must intimate the bank promptly.

Though the tenor of the bond is 8 years, early encashment/redemption of the bond is allowed after the fifth year from the date of issue on coupon payment dates. The bond will be tradable on exchanges, if held in demat form. It can also be transferred to any other eligible investor.

The option to exit or redeem SGBs prematurely can be availed from the 5th Year of investment. In case of premature redemption, investors would need to approach the bank branch at maximum thirty days before the coupon payment date. A request for premature redemption can only be entertained if the investor approaches the concerned bank branch at least one day before the coupon payment date. The proceeds will be credited to the customer’s bank account provided at the time of applying for the bond.

The bond can be gifted/transferred to a relative/friend/anybody who fulfils the eligibility criteria. The Bonds shall be transferable in accordance with the provisions of the Government Securities Act 2006 and the Government Securities Regulations 2007 before maturity by execution of an instrument of transfer which is available with the issuing agents.

Yes, these securities are eligible to be used as collateral for loans from banks, financial Institutions and Non-Banking Financial Companies (NBFC). The Loan to Value ratio will be the same as applicable to ordinary gold loan prescribed by the RBI from time to time. Granting loan against SGBs would be subject to decision of the bank/financing agency, and cannot be inferred as a matter of right.

Interest on the Bonds will be taxable as per the provisions of the Income-tax Act, 1961 (43 of 1961). The capital gains tax arising on redemption of SGB to an individual has been exempted. The indexation benefits will be provided to long terms capital gains arising to any person on transfer of bond.

TDS is not applicable on the bond. However, it is the responsibility of the bond holder to comply with the tax laws.

The issuing banks/SHCIL offices/Post Offices/Designated stock exchanges/agents through which these securities have been purchased will provide other customer services such as change of address, early redemption, nomination, grievance redressal, transfer applications etc.

Payment can be made through cash (upto ₹ 20000)/cheques/demand draft/electronic fund transfer.

Yes, nomination facility is available as per the provisions of the Government Securities Act 2006 and Government Securities Regulations, 2007. A nomination form is available along with Application form. An individual Non - resident Indian may get the security transferred in his name on account of his being a nominee of a deceased investor provided that the Non-Resident investor shall need to hold the security till early redemption or till maturity and the interest and maturity proceeds of the investment shall not be repatriable.

Yes. The bonds can be held in demat account. A specific request for the same must be made in the application form itself.

Till the process of dematerialization is completed, the bonds will be held in RBI’s books. The facility for conversion to demat will also be available subsequent to allotment of the bond.

Sovereign Gold Bonds are set to be tradable from a date yet to be notified by RBI. (It should be noted that only bonds held in de-mat form with depositories can be traded in stock exchanges) The bonds can also be sold and transferred as per provisions of Government Securities Act, 2006. Partial transfer of bonds is also possible.

The nominee/nominees to the bond may approach the respective Receiving Office with their claim. The claim of the nominee/nominees will be recognized in terms of the provision of the Government Securities Act, 2006 read with Chapter III of Government Securities Regulation, 2007. In the absence of nomination, claim of the executors or administrators of the deceased holder or claim of the holder of the succession certificate (issued under Part X of Indian Succession Act) may be submitted to the Receiving Offices/Depository. It may be noted that the above provisions are applicable in the case of a deceased minor investor also. The title of the bond in such cases too will pass to the person fulfilling the criteria laid down in Government Securities Act, 2006 and not necessarily to the Natural Guardian.

Yes, part holdings can be redeemed in multiples of one gm.