Sovereign Gold Bonds (2023-24 Series III) will open for subscription for five trading days, from December 18 to December 22. The date of the bonds issuance has been fixed as December 28, 2023. The price for the issue will be declared by Reserve Bank of India (RBI) soon.
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The price 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 Ltd (IBJA) for the last three working days of the week preceding the subscription period.
The issue price of the SGBs will be less by ₹50 per gram for the investors who subscribe online and pay through digital mode.
About SGBs
Sovereign Gold Bonds are denominated in grams of gold and serve as an alternative to physical gold ownership. Launched in November 2015, the primary aim of this scheme is to curtail the demand for physical gold and encourage savings to flow into financial assets.
One of the standout features of the Sovereign Gold Bond Scheme for 2023-24 is its tenure, which extends for eight years.
Additionally, investors have the option of premature redemption after the fifth year, a flexibility that can be exercised on the date of interest payment.
The investment limits are structured to accommodate various investor profiles. The minimum investment starts at just one gram of gold, making it accessible to a wide range of individuals.
At the upper end, individuals can subscribe to a maximum of 4 kg, while HUFs can also invest up to 4 kg, and trusts and similar entities enjoy a higher limit of 20 kg per fiscal year.
What makes SGBs especially appealing is their fixed interest rate of 2.50 percent per annum, paid semi-annually on the nominal value. Experts believe that these bonds cater to both conservative and aggressive investors.
How to buy SGBs?
The SGBs are sold through scheduled commercial banks (except small finance banks, payment banks, and regional rural banks), Stock Holding Corporation of India (SHCIL), Clearing Corporation of India (CCIL), designated post offices, National Stock Exchange of India and Bombay Stock Exchange.
Here are the steps to buy SGB online:
Step 1: Log in to the net banking account.
Step 2: Select 'e-Service' from the main menu, then choose Sovereign Gold Bond.
Step 3: First-time investors must register, review the Reserve Bank of India's terms and conditions, and proceed. Enter the necessary details for the SGB scheme and the depository participant from NSDL or CDSL, which hosts the demat account.
Step 4: Submit the registration form.
Step 5: After registration, click on the 'Purchase' option in the header tab.
Step 6: Input the subscription quantity and nominee details.
Step 7: Enter the one-time password (OTP) sent to the mobile phone to complete the process.
SGBs can also be acquired from the secondary market, even after the last subscription date, through primary issuance by stock exchanges or the Reserve Bank of India (RBI).
SGB versus gold ETFs and physical gold
| Particulars | Gold ETFs | Sovereign Gold Bond | Physical Gold |
| Safety of gold | High | High | Risk of theft, wear/tear |
| Returns and earnings | Less than the actual return on gold | More than the actual return on gold | Lower than the real return on gold due to making charges |
| Purity | High due to its existence in electronic form | High due to its existence in electronic form | The purity of gold cannot be exactly determined |
| Tradability Criteria | Tradable on the Stock Exchange | Can be traded and redeemed from the 5th year with the government | Restrictive |
| Gains | Long-term capital gain after three years | LTCG after three years. (No capital gain tax if redeemed after maturity) | LTCG after three years |
| Storage | Minimal | Minimal | High |
| Loan collateral | Not accepted | Accepted | Accepted |
(Source: Bankbazaar)
Here's a look at how SGB performed since the start of FY22:
| FY22 and FY23 | Issue Date | Issue Price (Rs) | Current Price (Rs) | Returns |
| 2021-22, Series I | May 25, 2021 | 4,777 | 5,926 | 24.05% |
| 2021-22, Series II | June 1, 2021 | 4,842 | 5,926 | 22.39% |
| 2021-22, Series III | June 8, 2021 | 4,889 | 5,926 | 21.21% |
| 2021-22, Series IV | July 20, 2021 | 4,807 | 5,926 | 23.28% |
| 2021-22, Series V | August 17, 2021 | 4,790 | 5,926 | 23.72% |
| 2021-22, Series VI | September 7, 2021 | 4,732 | 5,926 | 25.23% |
| 2021-22, Series VII | November 2, 2021 | 4,761 | 5,926 | 24.47% |
| 2021-22, Series VIII | December 7, 2021 | 4,791 | 5,926 | 23.69% |
| 2021-22, Series IX | January 18, 2022 | 4,786 | 5,926 | 23.82% |
| 2021-22, Series X | March 8, 2022 | 5,109 | 5,926 | 15.99% |
| 2022-23, Series I | June 28, 2022 | 5,091 | 5,926 | 16.40% |
| 2022-23, Series II | August 30, 2022 | 5,197 | 5,926 | 14.03% |
| 2022-23, Series III | December 27, 2022 | 5,409 | 5,926 | 9.56% |
| 2022-23, Series IV | March 14, 2023 | 5,611 | 5,926 | 5.61% |
(Source: RBI)
First Published: Dec 13, 2023 3:32 PM IST
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