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.
The interest and price will be notified by RBI at the time of issuance. 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.
DEMAT or Physical: The bonds can be held in the DEMAT. Physical bond holders will be issued Certificate of Holding on the date of issuance of the SGB.
Denomination: The bonds will be denominated in units of one gram of gold and multiples thereof.
Minimum size: Minimum permissible investment will be 1 gram of gold.
Maximum limit: Maximum limit of subscription shall be 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
Interest rate: The investors will be paid Interest on the amount of initial investment at the rate notified by RBI for a particular tranche at the time of its launch and is payable semi-annually.
Tenor: The tenor of the bond will be for a period of 8 years with an exit option from 5th year onwards to be exercised on the interest payment dates.
Redemption: Redemption price shall be fixed 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.
Why should I buy SGB rather than physical gold? What are the benefits?
What are the tax implications on i) interest and ii) capital gain?
Can a Minor invest in SGB?