1. What is the meaning of Sovereign Gold Bond (SGB)? Who is the issuer?
SGBs are government securities named in grams of gold. They are replacements for holding physical gold. Investors have to do the payment of the issue price in the bonds and cash will be recovered in cash on the maturity date. On behalf of Government of India, the Bond is issued by Reserve Bank of India.
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2. Why should I purchase SGB instead of physical gold? What are the benefits?
The number of gold for which the investors give is saved since he gets the ongoing market price at the time of recovery/ premature recovery. The SGB provides a better option for holding gold in physical form. The costs of storage and risks are terminated. Investors are confident about the market value of gold at the period of maturity and periodical interest. SGB is free from problems such as purity and making charges in the case of gold in jewelry form. The bonds are confined in the books of the RBI or in the form of demat removing risk of loss of scrip and other losses.
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3. In SGBs, Are there any risks in investing?
There may be a risk of capital loss, in case the market price of gold shrinks. Although, the investor does not lose in terms of the units of gold which he has paid for.
4. Who is entitled to invest in the SGBs?
A person resident in India as claimed under Foreign Exchange Management Act, 1999 are entitled to invest in SGB. Entitled investors consist of individuals, trusts, HUFs, charitable institutions, and universities.
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5. Joint holding is allowed or not?
Yes, it is allowed.
6. Can a Minor do investment in SGB?
Yes. The form on behalf of the minor has to be created by his/her guardian.
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7. Where can investors get the application?
The application will be given by the issuing SHCIL offices or banks or agents or designated Post Offices. It can also be uploaded from the website of RBI. Banks may also make facility of online application available.
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8. What are the Know-Your-Customer (KYC) standards?
Every application must be given with the ‘PAN Number’ in it, provided by the Income Tax Department to the investor.
9. Can an investor have more than one investor ID for subscribing to the Sovereign Gold Bond?
No, an investor can have only one unique investor Id which should be linked to any of the prescribed documents of identification. The unique investor ID is to be utilized for all the following investments in the scheme. For holding securities in dissolved form and offering of PAN in the application form is compulsory.
10. What is the highest and lowest limit for investment?
The Bonds are provided in denominations of one gram of gold and in multiples thereof. Lowest investment in the Bond shall be a gram with the highest limit of subscription of 4 kg for Hindu Undivided Family (HUF), 4 kg for individuals, and 20 kg for trusts and similar institutions informed by the government from time to time per fiscal year i.e. April – March. In joint holding case, the limit concerns to the first applicant. The annual ceiling will contain bonds subscribed under various tranches during issuance at the beginning by Government and those bought from the secondary market. The ceiling on investment will not contain the holdings as security by banks and other Financial Institutions.
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11. Can each member of my family purchase 4Kg in the name of their own?
Yes, each family member can purchase the bonds in his/her own name if they fulfill the criteria of eligibility as mentioned at Q No.4.
12. Can an investor or 4 Kg or trust buy 20 Kg value of SGB every year?
Yes. An investor or 4 Kg or trust buy 20 Kg value of gold every year as the ceiling has been secured on a basis of the fiscal year (April-March).
13. Is the highest limit of 4 Kg applicable in joint holding case?
Yes, the highest limit will be applicable to the first applicant in a joint holding case for that particular application.
14. Define the rate of interest and how the interest will be paid?
The Bonds carry interest at the rate of 2.50 percent (fixed rate) per annum on the value of the beginning investment. Interest will be transferred semi-annually to the investor’s bank account and the last interest will be payable on the completion along with the principal.
15. Who are the authentic agencies selling the SGBs?
Bonds are issued through branches or offices of Scheduled Private Banks, Nationalized Banks, designated Post Offices, Scheduled Foreign Banks, the authorized stock exchanges and Stock Holding Corporation of India Ltd. (SHCIL) either straightly or by their agents.
16. If I apply, am I secured allotment?
If the customer fulfills the criteria of eligibility, makes a valid identification document and sends the application money on time, he/she will get the allotment.
17. When will the customers be given Holding Certificate?
The customers will be given Holding Certificate on the date of issuance of the SGB. Certificate of Holding can be taken from the SHCIL offices/ issuing banks/ Designated stock exchanges/ Post Offices/ agents or acquired straightly from RBI on email if the email address is given in the application form.
18. Can I apply online?
Yes, a customer can apply online via the website of the mentioned scheduled commercial banks. The issue price of the Gold Bonds will be ₹ 50 per gram low than the nominal value to those investors who apply online and the payment against the application is done via digital mode.
19. At what price the bonds are issued?
The nominal value of Gold Bonds shall be in Indian Rupees fixed on the simple average of closing price of gold of 999 purity basis, issued by the India Bullion and Jewelers Association Limited, for the last 3 business days of the week before the subscription period.
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20. Will RBI issue the rate of gold applicable every day?
The price of gold for the applicable tranche will be issued on RBI website two days before the issue opens.
21. Can I gift the bonds to a friend or relative on any occasion?
The bond can be gifted or transferable to a friend or relative or anybody who meets the criteria of eligibility (as defined at Q.no. 4.). The Bonds shall be issuable in respect to the provisions of the Government Securities Act 2006 and the Government Securities Regulations 2007 before the period of maturity through execution of an instrument of transfer which is present with the issuing agents.
22. How do I contact RBI to ask my queries regarding the Sovereign Gold Bond?
A committed e-mail has been provided by the Reserve Bank of India to get queries from public members about the Sovereign Gold Bonds. Investors can mail any of their queries to this email id.