Sovereign Gold Bonds scheme's first tranche to open on June 19

The government of India, in consultation with the Reserve Bank of India, has decided to issue Sovereign Gold Bonds (SGBs) in two tranches during the first half of the current financial year 2023-24.

The 2023-24 Series I subscription date is fixed during June 19-23, 2023, while the Series II subscription date is September 11-15, 2023, the RBI said in a statement.

The issue date for Series I is June 17, 2023, while the issue date for Series II is September 20, the RBI said.

"The SGBs will be sold through Scheduled Commercial banks (except Small Finance Banks, Payment Banks, and Regional Rural Banks), Stock Holding Corporation of India Limited (SHCIL), Clearing Corporation of India Limited (CCIL), designated post offices, and recognised stock exchanges, viz., National Stock Exchange of India Limited and Bombay Stock Exchange Limited," said the RBI.

The SGB scheme was launched by the Centre in November 2015, under the gold monetisation scheme. These are government securities denominated in grams of gold and are the perfect alternative to investment in physical gold. These bonds, issued by the RBI on behalf of the government, eliminate several risks associated with physical gold. Investors have to pay the issue price in cash and the bonds will be redeemed in cash on maturity.

The SGBs can be restricted for sale to resident individuals, Hindu Undivided Families, trusts, universities, and charitable institutions, and will be denominated in multiples of gram(s) of gold with a basic unit of One gram.

The tenor of the SGB will be for a period of eight years with an option of premature redemption after 5th year to be exercised on the date on which interest is payable. The minimum permissible investment will be One gram of gold, while the maximum limit of subscription shall be 4 Kg for individuals, 4 Kg for HUF, and 20 Kg for trusts, and similar entities per fiscal year (April-March).

"A self-declaration to this effect will be obtained from the investors at the time of making an application for subscription. The annual ceiling will include SGBs subscribed under different tranches, and those purchased from the secondary market, during the fiscal year," says the central bank.

In the case of joint holding, the investment limit of 4 Kg will be applied to the first applicant only. The RBI says the price of SGB will be fixed in Indian rupees on the basis of a simple average of the closing price of gold of 999 purity, published by the India Bullion and Jewellers Association Limited (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.

In terms of payment options, it can be done via cash payment (up to a maximum of ₹20,000) or demand draft or cheque, or electronic banking.

Besides, the investors will be compensated at a fixed rate of 2.50 percent per annum payable semi-annually on the nominal value. The RBI says the commission for distribution of the SGB will be paid at the rate of 1% of the total subscription received by the receiving offices and receiving offices will share at least 50% of the commission with the agents or sub-agents.