The sixth and last tranche of the Sovereign Gold Bond (SGB) scheme, issued by the Reserve Bank of India (RBI) on behalf of the government, for this financial year will open for subscription on Monday for five days.
The scheme was launched in November 2015 to reduce the demand for physical gold and shift a part of the domestic savings, used to buy gold, into financial savings.
Here is all you need to know about the sixth tranche of the SGB scheme:
Who issues the Sovereign Gold Bond scheme?
Sovereign Gold Bonds are issued by RBI on behalf of the government and are part of the Centre’s market-borrowing programme.
When will the current issue open?
The SGB scheme 2020-21 Series VI will be open for subscription from August 31 and close on September 4.
What is the issue price for SGB scheme 2020-21 Series VI?
RBI has announced an issue price of ₹5,117 per unit for the sixth series of Sovereign Gold Bond 2020-21. The issue price for the bonds (series V), which were open for subscription from August 3 to August 7, was ₹5,334 per gram of gold.
How is the issue price calculated?
{{/usCountry}}How is the issue price calculated?
{{/usCountry}}The issue price of the SGB scheme is calculated using a simple average of the last three trading sessions before the launch of each tranche. Spot gold rates by the India Bullion and Jewellers Association (IBJA) are used to calculate the issue price.
“The nominal value of the bond based on the simple average closing price for gold of 999 purity of the last three business days of the week preceding the subscription period, i.e. August 26 – August 28, 2020, works out to ₹5,117 per gram of gold,” RBI has said.
The central bank said bids for the Sovereign Gold Bond programme will be settled on September 8.
Is there any discount?
The government and RBI will offer a discount of ₹50 per gram to investors applying online using a digital mode of payment. The issue price for such investors will be ₹5,067 per unit.
Who can buy the bonds?
The bonds are restricted for sale to resident individuals, Hindu Undivided Families (HUFs), trusts, universities and charitable institutions. The minimum permissible investment will be 1 gram of gold and the maximum limit of subscription shall be 4kg for individual, 4kg for HUF and 20kg for trusts and similar entities per fiscal (April-March).
Where are the bonds sold?
The gold bonds are sold through banks, except small finance banks and payment banks), Stock Holding Corporation of India (SHCIL), designated post offices, and recognised stock exchanges (NSE and BSE).
What’s the lock-In period?
The gold bond scheme comes with a tenor of eight years and has an exit option after the fifth year. The option can be exercised on interest payment dates.
What’s the investment limit?
A minimum of one gram and a maximum of four kilograms of gold can be acquired by eligible individuals and HUFs in a financial year. Trusts and similar entities can purchase up to 20kg in a financial year.
What are the tax implications?
The interest on Sovereign Gold Bonds is taxable but the capital gains arising out of redemption are exempted for individual investors.
How have the bonds done in the past?
A total of ₹9,652.78 crore (30.98 tonnes) has been raised through the Sovereign Gold Bonds Scheme (37 tranches) since its inception in November 2015, RBI said in its 2019-20 annual report. RBI issued 10 tranches of SGBs for an aggregate amount of ₹2,316.37 crore (6.13 tonnes) during 2019-20.