Sovereign gold bonds to open for subscription from August 31; here's what you need to know

Subscription for the sixth tranche of the Sovereign Gold Bond (SGB) Scheme will begin from Monday, August 31. The issue price for Sovereign Gold Bond (SGB) 2020-210-Series VI is Rs  5,117 per gram of gold. However, investors, who will apply online or make payments via digital mode will get a discount of Rs 50 per gram less than the nominal value. Therefore, the issue price has been fixed at Rs 5,067 per gram for such investors.

Here are 10 things to know about the Sovereign Gold Bond scheme:

1. The subscription will remain open from August 31 till September 4.

2. The issuance date for the Sovereign Gold Bond Scheme, of the sixth tranche, will be on September 8, 2020.

3. Gold bonds have a maturity period of eight years with an optional exit after the fifth year. However, if an investor exits before the lock-in period of 5 years, they can always get out of the bonds by selling it on stock exchanges.

4. The bonds are restricted for sale to resident individuals, Hindu Undivided Families (HUFs), Trusts, Universities, and Charitable Institutions.

5. The minimum permissible investment will be 1 gram of gold and the maximum limit of subscription shall be 4 kg for individual, 4 kg for HUF, and 20 kg for trusts and similar entities per fiscal (April-March).

6. Sovereign Gold Bond (SGB) 2020-21 is issued by the RBI on behalf of the government of India. They are a substitute for investment in physical gold.

7. Sovereign Gold Bonds can be bought from all banks (except small finance banks and payment banks), the National Stock Exchange (NSE), the Bombay Stock exchange (BSE), Stock Holding Corporation of India (SHCIL), and designated post offices.

8. Gold bonds can be used as collateral for loans.

9. The current interest rate for SGB is 2.50 per cent annually on the issue price. No TDS is applicable to interest.

10. One can trade gold sovereign bonds on stock exchanges within a specific date.

Also read: Sovereign gold bond issue to open for subscription on Aug 31; here's all you need to know

Also read: Sixth tranche of Sovereign Gold Bond opens on Aug 31; check out issue price

(Edited by: Mansi Jaswal)