The fourth tranche of the Sovereign Gold Bond (SGB) scheme opens for subscription today (February 12) at a price of Rs 6,263 per gram. For investors willing to apply online, there is a discount of Rs 50 per gram and the then issue price is Rs 6,213 per gram.
The SGB issue closes on Friday, February 16. The date of issuance of SGB has been fixed as Wednesday, February 21.
Payment for the sovereign gold bonds can be made through cash payment permitted up to a maximum of Rs 20,000 or via demand draft or cheque or electronic banking.
The price of SGB is based on the simple average of the closing gold price of 999 purity of the previous three business days from the date of redemption as published by the India Bullion and Jewellers Association Ltd (IBJA). In this case, the three business days are between February 7 and February 9, 2024.
Earlier in December month, the Reserve Bank of India (RBI) announced two fresh issues of Sovereign Gold Bond Scheme 2023-24 – one in December and the next in February which is now open for subscription.
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The sale of SGBs is restricted for sale to resident individuals, HUFs, Trusts, Universities, and Charitable Institutions. The gold bond is denominated in multiples of gram(s) of gold with a basic unit of one gram. The tenor of these bonds will be for 8 years with an option of premature redemption after the 5th year to be exercised on the date on which interest is payable.
The minimum permissible investment will be one gram of gold and the maximum limit of subscription will be 4 kg for individuals, 4 kg for HUF, and 20 kg for trusts and similar entities per fiscal year (April-March) notified by the government. In the case of joint holding, the investment limit of 4 kg will be applied to the first applicant only.
The sovereign gold bond scheme was launched in November 2015 to reduce the demand for physical gold and shift a part of the domestic savings — used for the purchase of gold — into financial savings.
In another development, RBI has also set Monday as the date for premature redemption of SGB 2018-19 Series VI of the sovereign gold bond. The price for premature redemption is Rs 6,263 per gram. Premature redemption in the SGB scheme is permitted after the completion of the fifth year from the date of issue. RBI issued the tranche on February 12, 2019.
The redemption price of SGB is based on the simple average of the closing gold price of 999 purity of the previous three business days from the date of redemption as published by the India Bullion and Jewellers Association Ltd (IBJA). In this case, the three business days are between February 7 and February 9, 2024.
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