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What Is RBI Sovereign Gold Bond (SGB) Scheme? Benefits And Upcoming Tranches, 2021-2022

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The RBI Sovereign Gold Bond (SGB) Scheme is a kind of government bond, that is simply translated to gold. At present, the traditional Indian investors and common buyers are quite concerned about investing in gold, because during the pandemic it has proved to be a significant hedge against inflation. In October 2021, the Indian gold rates are not as high as the 2020's peak levels, but before Diwali, the precious metal is gaining more demand.

 
What Is RBI Sovereign Gold Bond (SGB) Scheme? Benefits And Upcoming Tranches

For Indians, gold jewelleries have always been the first choice, when it comes to gold investment. But now, more awareness and return-oriented thinkings have also led them towards virtual gold options. The RBI Sovereign Gold Bond (SGB) Scheme, in that case, is one of the best options for virtual gold investment. Because it will assure the investor of the RBI, on behalf of the central government.

Benefits

In SGB, an investor can get a fixed interest rate of 2.5%, payable half-yearly, which will be paid on the scheme's maturity along with the principal amount. No other gold investment will offer this interest amount with the security of RBI. Additionally, no 'capital gain tax' is also charged on the redemption of the bond. However, the RBI Sovereign Gold Bond (SGB) Scheme is also popular for its easy liquidity. The SGBs are issued for 8 eight years term by the government, but even before 8 years, one can take redemption from the bond by selling it. An investor can any time sell the bond on the secondary market for immediate liquidity. Hence, if an investor misses the RBI subscription date for SGB, still it will be possible for him/her to buy the bond from the equity markets. Also, by investing in SGB, one can avoid the burden of holding physical gold.

Upcoming tranches

The union government has announced that the RBI Sovereign Gold Bonds Scheme 2021-22, is going to be issued in 4 more tranches in the current fiscal. The finance ministry has confirmed that the new tranche will be in operation from October 2021 to March 2022. The issue date of the first upcoming tranche, which Series VII, will be opened for subscription on October 25, Monday. The tranche will close on October 29. So, the investors will get 5 days to invest in the RBI SGB scheme.

 

The Finance Ministry has released the subscription dates and issue dates.

TrancheSubscription DateDate of Issuance
2021-22 Series VIIOctober 25-29, 2021November 2, 2021
2021-22 Series VIIINovember 29-December 3, 2021December 7, 2021
2021-22 Series IXJanuary 10-14, 2022January 18, 2022
2021-22 Series XFebruary 28-March 4, 2022March 8, 2022

SGB price calculation

According to the RBI, the nominal value of the bond will be based on the simple average closing price, published by the India Bullion and Jewellers Association Ltd (IBJA), for gold of 999 purity of the last 3 business days of the week preceding the subscription period. The RBI also provides a discount of Rs. 50/- per gram lesser than the nominal value to those investors who will apply online.

Why Investors Should Put Money In The Sovereign Gold Bond Scheme?Why Investors Should Put Money In The Sovereign Gold Bond Scheme?

Story first published: Friday, October 22, 2021, 11:34 [IST]
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