India has an estimated 20,000 tonnes of gold lying idle with Indian households and institutions. The following schemes are aimed at bringing the gold lying with citizens into the economy, and at reducing India’s dependence on gold imports.
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 Reserve Bank on behalf of Government of India.
Persons resident in India as defined under Foreign Exchange Management Act, 1999 are eligible to invest in SGB. Eligible investors include individuals, HUFs, trusts, universities, charitable institutions, etc.
The Bonds bear interest at the rate of 2.50 per cent (fixed rate) per annum on the amount of initial investment. Interest will be credited semiannually to the bank account of the investor and the last interest will be payable on maturity along with the principal.
The Reserve Bank of India, in consultation with the Government of India, issues tranches of Sovereign Gold Bonds.
Sovereign Gold Bond, 2020- 21
Government of India, in consultation with the Reserve Bank of India, has decided to issue Sovereign Gold Bonds-2020-21. The Sovereign Gold Bonds will be issued in six tranches from April 2020 to September 2020 as per the calendar specified below:
Date of Subscription
Date of Issuance
2020-21 Series I
April 20 - 24 , 2020
April 28, 2020
2020-21 Series II
May 11 - 15, 2020
May 19, 2020
2020-21 Series III
June 08 - 12, 2020
June 16, 2020
2020-21 Series IV
July 06 - 10, 2020
July 14, 2020
|5||2020-21 Series V||August 03 - 07, 2020||August 11, 2020|
|6||2020-21 Series VI||Aug 31 - Sep 04, 2020||September 08, 2020|
The Bonds will be sold through Scheduled Commercial banks(except Small Finance Banks and Payment Banks), Stock Holding Corporation of India Limited (SHCIL), designated post offices, and recognised stock exchanges viz., National Stock Exchange of India Limited and Bombay Stock Exchange Limited. The features of the Bond are given below:
Sovereign Gold Bond 2020-21
To be issued by Reserve Bank India on behalf of the Government of India.
The Bonds will be restricted for sale to resident Indian entities including individuals, HUFs, Trusts, Universities and Charitable Institutions.
The Bonds will be denominated in multiples of gram(s) of gold with a basic unit of 1 gram.
The tenor of the Bond will be for a period of 8 years with exit option after 5th year to be exercised on the interest payment dates.
Minimum permissible investment will be 1 gram of gold.
The maximum limit of subscribed shall be 4 KG for individual, 4 Kg for HUF and 20 Kg for trusts and similar entities per fiscal (April-March) notified by the Government from time to time. A self-declaration to this effect will be obtained. The annual ceiling will include bonds subscribed under different tranches during initial issuance by Government and those purchase from the Secondary Market.
In case of joint holding, the investment limit of 4 KG will be applied to the first applicant only.
Price of Bond will be fixed in Indian Rupees on the basis of simple average of closing price of gold of 999 purity published by the India Bullion and Jewellers Association Limited for the last 3 working days of the week preceding the subscription period. The issue price of the Gold Bonds will be Rs 50 per gram less for those who subscribe online and pay through digital mode. The issue price of the Bond during the subscription period shall be Rs 4,590 (Rupees Four thousand Five hundred Ninety only) – per gram, as also published by RBI in their Press Release dated 8th May, 2020.
Payment for the Bonds will be through cash payment (upto a maximum of Rs 20,000) or demand draft or cheque or electronic banking.
The Gold Bonds will be issued as Government of India Stocks under GS Act, 2006. The investors will be issued a Holding Certificate for the same. The Bonds are eligible for conversion into demat form.
The redemption price will be in Indian Rupees based on simple average of closing price of gold of 999 purity of previous 3 working days published by IBJA.
Bonds will be sold through banks, Stock Holding Corporation of India Limited (SHCIL), designated post offices as may be notified and recognised stock exchanges viz., National Stock Exchange of India Ltd and Bombay Stock Exchange Ltd, 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.
|Bonds can be used as collateral for loans. The loan-to-value (LTV) ratio is to be set equal to ordinary gold loan mandated by the Reserve Bank from time to time.|
Know-your-customer (KYC) norms will be the same as that for purchase of physical gold. KYC documents such as Voter ID, Aadhaar card/PAN or TAN /Passport will be required. Every application must be accompanied by the ‘PAN Number’ issued by the Income Tax Department to the investor(s).
The interest on Gold Bonds shall be taxable as per the provision of Income Tax Act, 1961 (43 of 1961). The capital gains tax arising on redemption of SGB to an individual has been exempted. The indexation benefits will be provided to long term capital gains arising to any person on transfer of bond
Bonds will be tradable on stock exchanges within a fortnight of the issuance on a date as notified by the RBI.
Bonds acquired by the banks through the process of invoking lien/hypothecation/pledge alone, shall be counted towards Statutory Liquidity Ratio.
Commission for distribution of the bond shall be paid at the rate of 1% 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.
How and where to buy it
Sovereign Gold Bonds will be issued on payment of rupees and denominated in grams of gold. Minimum investment in the bond shall be 1 grams. The bonds can be bought by Indian residents or entities and is capped at 500 grams.
Investors can apply for the bonds through scheduled commercial banks and designated post offices. NBFCs, National Saving Certificate (NSC) agents and others, can act as agents. They would be authorised to collect the application form and submit in banks and post offices.
For FAQS on SGB scheme, Click here.
It is a gold savings account which will earn interest for the gold that you deposit in it. Your gold can be deposited in any physical form – jewellery, coins or bars. This gold will then earn interest based on gold weight and also the appreciation of the metal value. You get back your gold in the equivalent of 995 fineness gold or Indian rupees as you desire (the option to be exercised at the time of deposit).
The Gold Monetisation Scheme will replace the existing Gold Deposit Scheme, 1999. However, deposits outstanding under the Gold Deposit Scheme will be allowed to run till maturity unless the depositors prematurely withdraw them.
The designated banks will accept gold deposits under the Short Term (1-3 years) Bank Deposit as well as Medium (5-7 years) and Long (12-15 years) Term Government Deposit Schemes.
Who and where can the account be opened?
Resident Indians (Individuals, HUF, Trusts including Mutual Funds/Exchange Traded Funds registered under SEBI (Mutual Fund) Regulations and Companies) can make deposits under the scheme. The opening of gold deposit accounts will be subject to the same rules with regard to customer identification as are applicable to any other deposit account.
Modifications in the Gold Monetisation Scheme
In consultation with Government, RBI has issued a Master Direction on GMS on 21st January, 2016, which amends the Master Direction dated 22nd October, 2015 earlier issued by RBI on GMS. The changes made in the scheme are given below:-
It is again clarified that Tax exemptions under the GMS include exemption of interest earned on the gold deposited and exemption from capital gains made through trading or at redemption. It is also reiterated that as per CBDT instructions No. 1916 dated 11th May, 1994, in course of IT Search u/s 132, gold jewellery to the extent of 500 gms per married lady, 250 gms per unmarried lady and 100 gms per male member of the family, need not be seized by tax authorities.
The scheme has been further modified on 31st March, 2016. Now, for the gold deposited under Medium and Long Term Government Deposits (MLTGD), the redemption of principal at maturity shall, at the option of the depositor, be either in Indian Rupee equivalent of the value of deposited gold at the time of redemption or in gold. Where the redemption of the deposit is in gold, an administrative charge at a rate of 0.2% of the notional redemption amount in terms of INR shall be collected from the depositor. However, the interest accrued on MLTGD shall be calculated with reference to the value of gold in terms of Indian Rupees at the time of deposit and will be paid only in cash.
The Indian Gold Coin is part of Indian Gold monetisation program. The coin will be the first ever national gold coin will have the national emblem of Ashok Chakra engraved on one side and the face of Mahatma Gandhi on the other side. Initially, the coins will be available in denominations of 5 and 10 grams. A 20 grams bar/bullion will also be available. The Indian Gold Coin is unique in many respects and will carry advanced anti-counterfeit features and tamper-proof packaging that will aid easy recycling.
Source : RBI