Sovereign Gold Bond Scheme (SGB Scheme)

Sovereign Gold Bond scheme is an investment scheme announced by Government of India. The scheme is open for subscription from Monday to Wednesday of every week from October 09, 2017. The SGBs are issued for a period of eight years at an interest rate of 2.50 percent (fixed rate) per annum.

Who are eligible to invest in Sovereign Gold Bond Scheme (SGB scheme)?

The SGBs can be held by a resident India, in his capacity as an individual, or on behalf of minor child, or jointly with any other individual.  Trusts, Charitable Institution and Universities too can invest in SGBs. Nomination can be registered by investors. The bonds are transferrable. The Bond scan also be traded from the date of credit into the demat account of the investor.

When is the SGBs issued and in which form?

The SGBs which is basically a bond, is issued in the form of Government of India Stock. The investors receive a Holding Certificate which can be converted into demat form too. The bond is issued on the first business day of next week following the week for the applications received during the previous Monday to Wednesday.

The Bonds are denominated in units of one gram of gold and multiples thereof. Minimum investment in the Bonds shall be one gram with a maximum limit of subscription of 4 kg for individuals, 4 kg for Hindu Undivided Family (HUF) and 20 kg for trusts and similar entities notified by the government from time to time per fiscal year (April – March).  The annual ceiling is applicable to SGBs purchased under different tranches during issuance by Government and also purchased from secondary market.

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What is the issue price and interest rate paid on SGBs?

Price of the Bonds is fixed in Indian Rupees on the basis of simple average of closing price of gold of 999 purity published by the India Bullion and Jewelers Association Limited for the last three business days of the week preceding the subscription period. If investors apply through online and make payment through digital mode, there will be a discount of ₹ 50 per gram.

The Bonds will earn interest at the rate of 2.50 percent (fixed rate) per annum on the amount of initial investment. Interest shall be paid in half-yearly rests and the last interest shall be payable on maturity along with the principal.

How long will the Sovereign Gold Bonds be issued?

The Sovereign Gold Bonds is proposed to  be issued every week from October 2017 to December 2017 as per the calendar specified  below: However, Government of India may discontinue the scheme if warranted.


Period of Subscription

Date of issuance


October 09-11, 2017

October 16, 2017


October 16-18, 2017

October 23, 2017


October 23-25, 2017

October 30, 2017


October 30-November 01, 2017

November 06, 2017


November 06-08, 2017

November 13, 2017


November 13-15, 2017

November 20, 2017


November 20-22, 2017

November 27, 2017


November 27-29, 2017

December 04, 2017


December 04-06, 2017

December 11, 2017


December 11-13, 2017

December 18, 2017


December 18-20, 2017

December 26, 2017


December 26-27, 2017

January 01, 2018

Who will receive applications for Sovereign Gold Bonds?

Following entities are authorized to receive SGB applications either directly or through agents

•           Scheduled Commercial Banks (excluding RRBs),

•           Designated Post Offices

•           Stock Holding Corporation of India Ltd (SHCIL)

•           National Stock Exchange of India Limited and

•           Bombay Stock Exchange Ltd.

Payment shall be accepted in Indian Rupees through cash up to a maximum of ₹ 20,000/- or Demand Drafts or Cheque or Electronic banking. When payment is made through cheque or demand draft, the same shall be drawn in favour of receiving office.

How can SGBs redeemed?

 The Bonds shall be repayable on the expiration of eight years from the date of issue of Gold bonds. Pre-mature redemption of the Bond is permitted from fifth year of the date of issue on the interest payment dates. RBI/depository willl inform the investor of the date of maturity of the Bond one month before its maturity.

The redemption amount will be paid in  Indian Rupees and the redemption price shall be based on simple average of closing price of gold of 999 purity of previous 3 business days from the date of repayment, published by the India Bullion and Jewelers Association Limited.

Whether any loan can be obtained against SGBs?

Banks are permitted to accept Sovereign Gold Bond as collateral for loans. For loans granted against SGBs, the same Loan to Value ratio as applicable to ordinary gold loan is permitted. The loan will be disbursed by banks after noting lien on the Bonds in the depository. For encouraging banks to grant loans against SGBs it is stipulated that SGBs acquired by the banks through the process of invoking lien/hypothecation/pledge will be counted towards Statutory Liquidity Ratio.

What about the tax implications on SGBs?

Interest on the Bonds is taxable as per the provisions of the Income-tax Act, 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

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