RBI Sovereign Gold Bond (SGB) Scheme - Unique Gold Investment Tool By Government, Opens Soon

The Sovereign Gold Bond (SGB) Scheme by RBI is a unique gold investment tool in terms of multiple benefits, like online gold investment, facility and assurance of government bonds, and yearly interest-earning opportunities. The next tranche of the Sovereign Gold Bond (SGB) Scheme 2021-22 - Series XI, will be open in the next week, on January 10, Monday, and it will close on January 14. The settlement date for the SGB - Series XI is January 18, 2022, according to the Ministry of Finance, Government of India.

The RBI has fixed the SGB rate for this tranche at Rs. 4,791/ gram of gold. In addition to that, the RBI offers a discount of Rs. 50/gram for investors who will apply and pay online, so they will have to pay Rs. 4,741/ gram. In the immediate earlier tranche, the SGB issue price was Rs. 4,761/ gram. The SGB rate is determined based on the average of the closing price of gold of 999 purity in the last 3 days working days of the week preceding the subscription period, - which is fixed by the India Bullion and Jewellers Association (IBJA).

Why should you invest in Sovereign Gold Bond (SGB) Scheme by RBI?

Gold prices in 2022 are expected to fall even than the last year's range, as the US Fed is anticipated to be hawkish against inflation, and will hike the interest rate. So, the inflation rate can stay under control and the precious metal can fall. With a bearish gold market, investors can now consider investing in gold. The Sovereign Gold Bond (SGB) Scheme is one of the best options to invest in gold, as it imposes no risk of theft or burden of storage. Additionally, unlike other gold investment options, the SGB offers a 2.50% interest rate per annum (half-yearly basis) on the amount of initial investment. To invest in SGBs, you do not need to pay GST, and you will not have to encounter any capital gain tax on redemption, and SGBs can be used as collateral for loans.

You need to invest in a minimum of 1 gram of gold for SGB, and you are required to hold the position for 8 years with the RBI. However, before that period, you can sell the SGB in equity markets.

How to start the investment procedure?

To invest in SGB, you need to fill up the application form of SGB, which is provided by the issuing banks or Stock Holding Corporation of India Limited (SHCIL) offices, Post Offices, and agents. Small Finance Banks and Payment Banks are not authorized to sell SGBs. You can also buy SGBs from NSE and BSE. Additionally, one can find the SGB form at the RBI's official website. You should have a PAN card, accompanied by the KYC norms that your 'unique investor Id' can be fetched. Additionally, you need a Demat account for the investment. Banks provide online application facilities so that you can apply and pay via digital mode and avail of the Rs. 50/gram discount.

(Also read: Why Investors Should Put Money In The Sovereign Gold Bond Scheme?)