Upcoming Sovereign Gold Bonds: SGB 2023-24 - Series III To Open On December 18, RBI Sets Issue Price

The Reserve Bank of India (RBI) has announced the issuance of the Sovereign Gold Bond Scheme 2023-24 - Series III on December 18. Subscription in this SGB scheme will be allowed till December 22nd. The central bank has also announced the issue price for this new SGB scheme.

In its notification, RBI said, the nominal value of the bond based on the simple average of closing price [published by the India Bullion and Jewellers Association Ltd (IBJA)] for gold of 999 purity of the last three working days of the week preceding the subscription period, i.e. December 13, December 14, and December 15, 2023, works out to Rs 6,199 per gram of gold.

However, RBI also said it will offer a discount of Rs 50 per gram less than the nominal value to those investors applying online and making the payment against the application through digital mode. For such investors, the issue price of a Gold Bond will be Rs 6,149 per gram of gold.

The settlement date for SGB Scheme 2023-24 Series III is fixed on December 28th.

Some of the key features of the scheme as per RBI are:

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

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

- The tenor 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.

- The minimum permissible investment will be One gram of gold.

- 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.

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

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

- 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.

- 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.

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

- 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.

- SGBs shall be eligible for trading.