The Sovereign Gold Bonds are the Government Securities issued by the Reserve Bank of India and are denominated in grams of gold (1 unit = 1 gram).
The Sovereign Gold Bonds (SGB) returns have been a direct link to the gold price and investors earn additionally fixed interest of 2.75% per annum payable semi-annually on the amount of initial investment.
The Sovereign Gold Bonds provides the sovereign guarantees both on the interest and on redemption amount.
The investors have been the option to obtain the bonds in the physical form / DEMAT form and may maintain the holding in their existing DEMAT account opened with Depository Participants of NSDL and CDSL.
Features of SGB:
Fixed tenor – With premature withdrawal permissible from the 5th year, gold bonds are issued for 8 years. Also, personnel can sell their respective securities in the secondary market at the market rate of gold.
Periodic interest– A coupon rate that is disbursed half-yearly to investors of 2.5% per annum is incorporated with the sovereign gold bond scheme.
Premature withdrawal – Individuals willing to cash in their investment can do so after an obligatory holding period of 5 years. This payout benefit can exercise for the 5th, 6th, and 7th year of bond tenor and will be processed on the interest disbursement days.
Quantity of subscription – Subscriptions is to be made in Sovereign bonds as grams of gold. The lowest investment equivalent to the price of 1 gram of gold has to be made while the maximum limit is equal to the value of 4kg of gold for individuals and Hindu Undivided Families (HUF). Toward corporations and trusts, the upper limit is set up to 20kg.
The benefits of investments in SGB:
Purity-
While purity remains a matter of concern in the case of buying physical gold, the SGB furnishes a guarantee of 99.9 % purity of gold.
Assured Interest-
The Sovereign Gold Bonds (SGB) investors just not only need to spend any money to ensure the safety of gold but also get to an assured interest of 2.5 % per annum was paid on a half-yearly basis.
Millwood Kane International, Nish Bhatt, Founder & CEO, said, The government has raised over Rs 31,000 crore of funds via the scheme.
SGB is a preferred route for the government to switch all gold investments into a digital model, it will help keep the deficit under control and provide support to the currency.
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