Soveriegn Gold Bond Schemes 2023-24: RBI To Launch SGB In 2 Series; Subscription, Rate, Tenure, Other Details

The Reserve Bank of India (RBI) has announced the dates for new sovereign gold bond (SGB) schemes in two series namely Series III and Series IV respectively for the financial year 2023-24. SGBs are government securities denominated in grams of gold. They are substitutes for holding physical gold. Investors have to pay the issue price in cash and the bonds will be redeemed in cash on maturity. The Bond is issued by the Reserve Bank on behalf of the Government of India.

As per the latest notification, the subscription date for SGB 2023-24 Series III is from December 18th to 22nd. While the same will be issued on December 28.

Meanwhile, the SGB 2023-24 Series IV will be open for subscription from February 12 - February 16, 2024. The date of issuance of this series is set for February 21, 2024.

Here are key pointers to note before investing in SGBs of these series:

1. The SGBs will be restricted for sale to resident individuals, HUFs, Trusts, Universities and Charitable Institutions.

2. The SGBs will be denominated in multiples of gram(s) of gold with a basic unit of One gram.

3. The tenure of the SGB will be for eight years with an option of premature redemption after 5th year to be exercised on the date on which interest is payable.

4. Minimum permissible investment will be One gram of gold.

5. The maximum limit of subscription shall be 4 Kg for individuals, 4 Kg for HUF and 20 Kg for trusts and similar entities per fiscal year (April-March), as notified by the Government from time to time. A self-declaration to this effect will be obtained from the investors at the time of making an application for a subscription. The annual ceiling will include SGBs subscribed under different tranches, and those purchased from the secondary market, during the fiscal year.

6. In the case of joint holding, the investment limit of 4 Kg will be applied to the first applicant only.

7. The price of SGB will be fixed in Indian Rupees based on simple average of the closing price of gold of 999 purity, published by the India Bullion and Jewellers Association Limited (IBJA) for the last three working days of the week preceding the subscription period. The issue price of the SGBs will be less by Rs 50 per gram for the investors who subscribe online and pay through digital mode.

8. Payment for the SGBs will be through cash payment (up to a maximum of Rs 20,000) demand draft or cheque or electronic banking.

9. The SGBs will be issued as Government of India Stock under the Government Securities Act, 2006. The investors will be issued a Certificate of Holding for the same. The SGBs will be eligible for conversion into demat form.

10. The redemption price will be in Indian Rupees based on a simple average of the closing price of gold of 999 purity, of the previous three working days published by IBJA Ltd.

11. SGBs will be sold through Scheduled Commercial banks (except Small Finance Banks, Payment Banks and Regional Rural Banks), Stock Holding Corporation of India Limited (SHCIL), Clearing Corporation of India Limited (CCIL), designated post offices (as may be notified) and recognised stock exchanges viz., National Stock Exchange of India Limited and Bombay Stock Exchange Limited, either directly or through agents.

12. The investors will be compensated at a fixed rate of 2.50% per annum payable semi-annually on the nominal value.

13. The SGBs can be used as collateral for loans. The loan-to-value (LTV) ratio will be as applicable to any ordinary gold loan, mandated by the Reserve Bank from time to time.

14. The indexation benefits will be provided to long-term capital gains arising to any person on transfer of the SGB.

15. SGBs shall be eligible for trading.

16. SGBs acquired by the banks through the process of invoking lien/hypothecation/pledge alone, shall be counted towards Statutory Liquidity Ratio.

17. Commission for distribution of the SGB shall be paid at the rate of one per cent of the total subscription received by the receiving offices and receiving offices shall share at least 50% of the commission so received with the agents or sub-agents for the business procured through them.