Sovereign Gold Bond Scheme {गोल्ड बॉण्ड स्कीम}

SGB or Sovereign Gold Bonds are Bonds by Government which are issued by the RBI on behalf of the Government by payments made in rupees and entitled in grams of gold. The worth of these bonds is joined with the value of gold. In exchange, the investor receives income along with the current price of gold. However, these bonds are unlike the basic Government Securities as the redemption cost of these at the time of maturity is not a fixed amount but connected to the price of gold.

The Government of India introduced the gold bonds in the Union Budget 2015-16. After that, the Government gave details and guidelines about this scheme on October 30, 2015. However, the prime minister of India officially launched this scheme on November 5, 2015, along with two other projects- Gold coin and Gold Monetization Scheme. This scheme focuses on people who possess gold and want to convert into money while keeping its cost price. And it also targets potential customers who would like to buy gold for investments etc.

The bonds are going to be entitled to many grams of gold with a minimum unit of one gram. Per year interest will be 2.50% on the gold bonds, which will be paid twice a year on minimal value. There is tenure of eight years for these bonds. There is also an exit option given on the interest payment dates of the 5th, 6th, and 7th year. There are occupancy levels as well; the limitation for the maximum amount of gold an individual can subscribe to is four kg, four kg for undivided Hindu family, and 20 kg for other entities. If the bonds are co-owned, then the limit will be 4 kilograms for the first individual who applies only. 

The gold bond will be given as stocks as per the Government Security Act, 2006. Plus, all the investors will be given Holding Certificates as well.

Benefits 

• The bonds can be used as security for loans.
• You can pay for these bonds with cash (maximum INR 20,000), demand draft, cheque, or e-banking.
• The bonds are allowed to convert into the DEMAT form.
• The bonds can also be used as a form of security as the Government issues these.
• The bond you might invest has tax added to them, which will be given back to as a beneficial interest received by the investment.
• You will earn interest from a dead asset.
• It is easier to store and handle gold while keeping all the benefits of earnings per the approval of its cost in the future.
• This is a safe and better way of investment.
• This will also help in decreasing gold prices.
• The bonds can reduce the demand for gold, which will eventually add to the need to import it annually.

Eligibility

• Any person who wants to subscribe to the Gold Bond Scheme must meet these following eligibility criteria.
• This scheme is only open for Indian residents.
• Different kinds of entities, HUFs, associations, trusts, and individuals, can invest and apply for this scheme. They must be Indian residents. Joint-bonds are allowed as well.
• Minors can purchase the bonds but under the guidance of parents or guardians.

Features

• Denomination of Gold: The issue of the bonds will be in numerous weight denominations, which will start from one gram along with elasticity as per the gold purchases, according to the need of the individual.
• Format: The person has the option to keep these bonds either in demat or paper form, whichever is convenient.
• Elasticity: It's easier to invest in this scheme as it is flexible and can choose the amount of investment.
• Interest: By investing in this scheme, one can earn interest.
• Safety: there is no need to worry about gold, as there is no need for storage or anything. The investor won't receive the gold physically.
• Assurance: The scheme is regulated under Government, so the gold is pure and better quality.
• Maturity: The project will mature in eight years.
• Transfer: There is an option for transferring of the bonds; the investors can quickly transfer or gift the bonds to anyone.
• Premature withdrawal: One can withdraw from this scheme after five years of issues, and premature encashment is allowed.
• Loan collateral – Investors are permitted to use these bonds as collateral for loans.
• Payment: Any individual can choose to buy these bonds by various payment methods, such as cash, cheques, DDs, or Net Banking.
• Nomination: The scheme has the option for submission, as per the rules and regulations.
• Tradable: It is allowed to trade the bonds on stock exchanges while adhering to the RBI's guidelines.

You can learn more about this scheme on its official page on RBI website.

Interest rate

There is a fixed interest rate for this scheme, along with all investors being able to gain interest because of the investments. Now, the interest rate is at 2.75% per year, with payment of the interest twice a year. The Government can change the interest rates as per the guidelines.

Documents Required

• Identity Proof such as Aadhaar card or Passport or Pan card or Voter ID.

• The KYC process will be done by the agents, banks and post offices who are issuing these bonds.

Frequently Asked Questions

Q. Where do I apply for this scheme?

You can easily find the application form for Sovereign Gold Bonds at post offices and scheduled commercial banks. You can also download it from the official Website of the Reserve Bank of India.

Q. Can a minor invest in these bonds?

Yes, minors are eligible for investing in these bonds as well but under the supervision of a guardian or parents.

Q.  Are there any risks?

Yes, if the market rate of gold goes down there can be chances of risks. However, it will not affect the investor. 

Q. Can I apply for this online?

Yes, you can apply for these bonds online by visiting the official Websites of chosen banks who are issuing such bonds.

Q. Can I take a loan using Sovereign Gold Bonds?

Yes, you can take a loan by using the bonds as securities. 

Q. Do I have to pay for any extra tax?

No, you don’t have to pay for extra taxes.

Q. How do I pay for the bonds?

You can choose from any of the available options such as cash, cheques, DD or Net Banking.

Q. Is it possible to keep the Gold Bonds as DEMAT?

Yes, you can also keep the bonds as DEMAT.

Q. Can I trade Bonds?

Yes, you can trade the Sovereign Gold Bonds on stock exchanges as per the RBI guidelines.

Q. Can I sell or transfer Gold Bonds?

Yes, you can sell or transfer your bonds according to the Government Securities Act.

Q. Is the nomination facility available?

Yes, a nomination facility is available