The Reserve Bank of India (RBI) has been issuing Sovereign Gold Bonds (SGBs) since November 2015. The SGBs are denominated in grams of gold and are issued by the RBI on behalf of the Government of India. Moreover, they are available for purchase from banks, stock holding corporations, and designated post offices. This article will give you all the information you need to know to buy sovereign gold bonds in India!!

What are Sovereign Gold Bonds?

Sovereign Gold Bonds (SGBs) are debt instruments issued by the Reserve Bank of India (RBI) on behalf of the Government of India. The bonds are denominated in grams of gold and also they are redeemable in cash. The primary objective of the SGB scheme is to reduce the demand for physical gold and to shift a part of the domestic savings from physical gold to financial savings. The Sovereign Gold Bond Scheme was launched in November 2015. The first tranche of SGBs was issued in November 2015. Since then, six more tranches have been issued, with the latest one in September 2016.

SGBs are issued through banks, Stock Holding Corporation of India Ltd (SHCIL), designated post offices, and recognized stock exchanges — National Stock Exchange of India Ltd (NSE) and Bombay Stock Exchange Ltd (BSE).

The minimum investment in SGBs is 1 gram of gold. There is no maximum limit for investment in SGBs. The bonds will be sold in multiples of 1 gram with a face value of Rs 2,000 per gram.

The tenure of the bond is 8 years with an exit option from the 5th year to be exercised on the interest payment dates.

At maturity, the investor will be paid the current gold price on the date of redemption, also in addition to the income earned over the bond’s term.

Why invest in Sovereign Gold Bonds?

There are many reasons to invest in Sovereign Gold Bonds (SGBs). SGBs are a safe and convenient way to own gold, and also they offer a number of advantages over other forms of gold investment.

The government of India backs SGBs, so you know your investment is safe. They are also easy to buy and sell and can be traded on a stock exchange. SGBs are exempt from the capital gains tax, so you can keep more of your profits.

Finally, SGBs offer a higher interest rate than most other forms of gold investment. This makes them an attractive option for investors looking for a good return on their investment.

How to buy Sovereign Gold Bonds?

Assuming you would like tips on how to buy Sovereign Gold Bonds:

The Reserve Bank of India offers Sovereign Gold Bonds as a safe investment alternative to buying physical gold. Further, the bonds are denominated in grams of gold and are issued for a period of 8 years.

Sovereign Gold Bonds are issued in denominations of 1 gram, 2 grams, 5 grams, and 10 grams.

The minimum investment amount is 1 gram with no maximum limit.

The bonds are issued at a price that is calculated on the previous week’s closing gold price published by the Mumbai Bullion Association Ltd.

The investors have to pay the issue price in cash and the Bond will be credited to the investor’s Demat account on the date of allotment.

The Sovereign Gold Bond will be sold through banks, Stock Holding Corporation of India Limited (SHCIL), designated post offices, and recognized stock exchanges – National Stock Exchange of India Limited (NSE) and Bombay Stock Exchange Limited (BSE).

Applications for the bond can be made online through the websites of NSE or BSE, as well as through the SHCIL website and post offices.

Advantages of Sovereign Gold Bonds

The Sovereign Gold Bond (SGB) Scheme was launched by the Reserve Bank of India (RBI) in 2015. The main objectives of the scheme are to reduce the demand for physical gold and to provide an alternative to buying gold in the form of gold coins and bars.

SGBs are issued by the RBI on behalf of the Government of India and are denominated in grams of gold. Moreover, these bonds are sold through banks, designated post offices, and stock exchanges.

The key advantages of investing in SGBs are as follows:

1. Capital appreciation: The price of gold is expected to rise over the long term, so holding SGBs should result in capital gains.

2. Regular income: Interest is paid on SGBs every six months, providing a regular income stream.

3. Safety and security: SGBs are backed by the Government of India, making them one of the safest investments available.

4. Liquidity: SGBs can be traded on stock exchanges, providing liquidity in case you need to sell before the maturity date.

Eligibility

To be eligible to invest in Sovereign Gold Bonds, you must be:

• An Indian resident as defined in the Income Tax Act, 1961.
• Above the age of 18 years.
• Hold a pan card.

You can buy the Bonds as;

• As an individual
• Jointly with another person
• On behalf of a minor by his/her guardian

Eligible investors include individuals, HUFs, trusts, universities, and charitable institutions.

The bonds will be denominated in multiples of gram(s) of gold while the maximum can be 4 kg for individuals and Hindu Undivided families (HUF). For trusts, institutions, and other entities, the limit is 20 kg per fiscal year (April – March)

Conclusion

If you’re looking for a way to invest in gold without worrying about storing it, Sovereign Gold Bonds could be a good option for you. They’re easy to buy and backed by the Indian government, so you can rest assured that your investment is safe. With interest rates starting at 2.5%, they’re also a great way to earn passive income. So why not give them a try?