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Sovereign Gold Bond 2015-16
The Prime Minister has formally launched on November 05, 2015 three schemes related to gold viz. Sovereign Gold Bond (SGB), Gold Monetization Scheme (GMS) and the India Gold coin (IGC). The schemes were initially announced in the Union Budget 2015-16. The details of the schemes are available on the websites of Government of India (www.finmin.nic.in)and RBI (www.rbi.org.in).
The Prime Minister has formally launched on November 05, 2015 three schemes related to gold viz. Sovereign Gold Bond (SGB), Gold Monetization Scheme (GMS) and the India Gold coin (IGC). The schemes were initially announced in the Union Budget 2015-16. The details of the schemes are available on the websites of Government of India (www.finmin.nic.in)and RBI (www.rbi.org.in).
Sovereign Gold Bond 2015-16
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The issue will be open for subscription fromNovember 05 to November 20, 2015.The bonds will be issued on November 26, 2015. Applications for the bond will be accepted at branches of scheduled commercial banks and designated post offices. Resident Indian entities are eligible to invest in the bond.The issue will be managed and the bonds will be serviced by the RBI.FAQs are available on the RBI’s web-site (https://www.rbi.org.in/scripts/FS_FAQs.aspx?Id=109&fn=2757).Salient features of SGB are given below:
| Sl. No. | Item | Details |
| 1. | Issuance | To be issued by the GoIand managed by RBI. Issuance will be through branches of scheduled commercial banks and designated Post offices. |
| 2. | Eligibility | The Bonds will be restricted for sale to resident Indian entities including individuals, HUFs, trusts, Universities, charitable institutions. |
| 3. | Denomination | The Bonds will be denominated in multiples of gram(s) of gold with a basic unit of 1 gm. |
| 4. | Minimum size | Minimum permissible investment will be 2 units (i.e. 2 grams of gold). |
| 5. | Tenor | The tenor of the bond will be for a period of 8 years with exit option from 5th year onwards on interest payment dates. |
| 6. | Maximum limit | The maximum amount bought by an entity will not be more than 500 grams per person per fiscal year (April-March). A self-declaration to this effect will be required to be submitted by the investor. |
| 7. | Joint holding | In case of joint holding, the investment limit of 500 gram will be applicable to the first applicant. |
| 8. | Frequency | The Bonds will be issued in tranches. Each tranche will be kept open for a period to be notified. The first tranche will be open from November 05 to 20, 2015. |
| 9. | Issue price | Price of the Bonds will be in Indian Rupees on the basis of the previous week’s (Monday – Friday) simple average closing price for gold of 999 purity, published by the India Bullion and Jewellers Association Ltd. (IBJA). The issue price for the first tranche is Rs 2,684 per gram of gold. |
| 10. | Payment option | Subscription for the bonds can be through electronic funds transfer/cash payment/ cheque. |
| 11. | Issuance form | The bonds will be deemed as Government of India Stock under G-Sec Act, 2006. The investors will be issued a Holding Certificate. The bonds will be eligible for conversion to de-mat form. |
| 12. | Redemption price | The redemption price will be fixed in Indian Rupees on the basis of the previous week’s (Monday – Friday) simple average closing price for gold of 999 purity, published by IBJA. |
| 13. | Sales channel | Scheduled commercial banks (excluding RRBs) and Post Offices (as may be notified) are authorized to receive applicationsfortheBondseither directly or through agents. |
| 14. | Interest rate | TheBonds will bearinterestattherateof 2.75 per cent (fixed rate) perannum on the amount of initial investment. Interest will be paid half-yearlyand the last interest will bepaidonmaturityalong withtheprincipal. |
| 15. | Loan facility | Bonds can be used as collateral for loans. The loan-to-value (LTV) ratio will be the same as applicable to gold loans as per the extant Reserve Bank guidelines. |
| 16. | KYC | Know-your-customer (KYC) norms will be the same as that for gold. Identification documents such as Aadhar card/PAN or TAN /Passport will be required. |
| 17. | Tax treatment | Capital gains tax treatment will be the same as that for gold. |
| 18. | Tradability | Bonds will be tradable on exchanges/NDS-OM from a date to be notified by RBI. |
| 19. | SLR eligibility | The Bonds will be eligible for SLR. |
| 20. | Agency commission | Commission at the rate of 1% of the subscription amount will be paid to the banks/post offices. |
