Sovereign Gold Bond

Sovereign Gold Bond is being promoted by RBI, where in the person will be having an option to purchase the gold bond at the market rates. These bonds may be converted in to demat form as well.

The application of these bonds will be accepted from 5^th November, 2015 till 20^th November, 2015 through banks and designated post offices. The dates may further be opened in tranches by RBI through Public Notification. 

Details of the Bonds are as follows:

1.       Eligibility for Investment:

The Bonds under this Scheme may be held by a person resident in India, being an individual, in his capacity as such individual, or on behalf of minor child, or jointly with any other individual. Resident Indian entities include individuals, HUFs, trusts, Universities, Charitable institutions. Thus the bonds may be purchased in the name of the Resident Indian Entity. The holder of the bond shall be provided with certificate as per Form C (click to see the format).

2.       Applications

Subscription for the Bonds may be made in the prescribed application form (Form ‘A’) or in any other form as near as thereto stating clearly the grams of gold and the full name and address of the applicant. The receiving office shall issue an acknowledgment receipt in Form ‘B’ to the applicant.

3.       Denomination:

The minimum size of gold bond that a person can buy is 2 gm of gold, further the bond is available in the multiples of 1 gm of gold with maximum limit of 500 gm of gold.

4.       Issue Price

Price of the Bonds shall be fixed in Indian Rupees on the basis of the previous week’s (Monday – Friday) simple average closing price for gold of 999 purity, published by the India Bullion and Jewellers Association Ltd. (IBJA).

5.       Payment Options

Payment shall be accepted in Indian Rupees through Cash or Demand Drafts or Cheque or Electronic banking. Cheque or draft should be drawn in favour of the bank / post office (Receiving Office), specified in paragraph 7 above and payable at the place where the applications are tendered.

6.    Redemption / Maturity / Exit Option

The Bonds shall be repayable on the expiration of eight years from the date of issue. Pre-mature redemption of the Bond is allowed from fifth year of the date of issue on the interest payment dates. The redemption price shall be fixed in Indian Rupees on the basis of the previous week’s (Monday – Friday) simple average closing price for gold of 999 purity, published by IBJA.

7.   Loan against Bonds

The Bonds may be used as collateral for loans. The Loan to Value ratio will be as applicable to ordinary gold loan mandated by the RBI from time to time. The lien on the Bonds shall be marked in the depository by the authorized banks.

8.  Interest Rate

The investor will be compensated at a fixed rate of 2.75 percent per annum payable semi-annually on the initial investment.

9.  Tax Treatment (Income Tax on interest of Gold Bonds)

Interest on the Bonds shall be taxable as per the provisions of the Income-tax Act, 1961. Capital gains tax treatment will be the same as that for physical gold.

10.  Tradability in Bonds

The Bonds shall be eligible for trading from such date as may be notified by the Reserve Bank of India.

11.   Transferability

The Bonds shall be transferable by execution of an Instrument of transfer as in Form ‘F’, in accordance with the provisions of the Government Securities Act, 2006 (38 of 2006) and the Government Securities Regulations, 2007, published in part III, Section 4 of the Gazette of India dated the 1st December, 2007.

12.   SLR Eligibility

The bonds will be eligible for Statutory Liquidity Ratio

13.   Nomination

Nomination and its cancellation shall be made in Form ‘D’ and Form ‘E’, respectively, in accordance with the provisions of the Government Securities Act, 2006 (38 of 2006) and the Government Securities Regulations, 2007, published in part III, Section 4 of the Gazette of India dated the 1st December, 2007.

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