The latest installment of the government-run Sovereign Gold Bonds (SGBs) 2020-21- Series IX- will open for subscription today. The last date for subscription is January 1, 2021, with January 5 as the settlement date. The issue price for the next series of sovereign gold bonds is fixed at Rs 5,000 per gram, the Reserve Bank of India said in a statement on Thursday.
Sovereign Gold Bond 2020-21 is issued by the Reserve Bank India on behalf of the Government of India.
Here are 10 things to know about the latest Sovereign Gold Bond Scheme 2020-21 Series IX:
1. The value of the bond is based on the simple average closing price (published by the India Bullion and Jewellers Association Ltd) for gold of 999 purity of the last three business days of the week preceding the subscription period, that is, December 22-24.
2. As per the RBI's directive, buyers of Sovereign gold bond applying online and making payment through digital mode will be provided with a Rs 50 discount. For them, the issue price is Rs 4,950 per gram.
3. Gold bonds offer an annual interest rate of 2.50% per annum on the issue price to investors, which is paid half-yearly.
4. Gold bonds come with a tenor of 8 years and a lock-in period of 5 years. The maximum limit of subscription shall be 4kg for individuals and HUFs, and 20kg for trusts and similar entities per fiscal year.
5. The bonds are denominated in multiples of gram(s) of gold. The minimum investment limit in gold bonds is one gram of gold, where one unit of the bond is equal to one gram of gold.
6. Investors can buy the SGB schemes through commercial banks, post offices, stock exchanges Bombay Stock Exchange and National Stock Exchange, and the Stock Holding Corporation. Investors who can invest in the SGBs include individuals, trusts, charitable organisations, Hindu Undivided Families (HUFs) and universities.
7. This is the ninth tranche of gold bonds for this fiscal issued by the RBI. The first tranche of sovereign gold bond in the financial year 2020-2021 was open for subscription in April. The central bank had announced the government will issue Sovereign Gold Bonds (SGBs) in various tranches beginning April 20.
8. One can trade gold sovereign bonds on stock exchanges within a specific date. They are substitutes for investment in physical gold. Gold bonds can be used as collateral for loans.
9. SGB scheme was launched in November 2015 with an objective to reduce the demand for physical gold, by shifting the purchase of gold into financial savings. The yellow metal is considered to be a less risky asset during times of economic turmoil.
10. As per RBI's Annual Report 2019-20, a total of Rs 9,652.78 crore (30.98 tonnes) has been raised through the sovereign gold bond scheme (37 tranches) since its inception in November 2015.