Sovereign Gold Bond Scheme

• The Reserve Bank of India (RBI) recently announced the issue price for the upcoming Sovereign Gold Bond (SGB) Tranche 2.

ABOUT SOVEREIGN GOLD BOND SCHEME:

• SGBs were introduced by the Government of India in 2015 under the Gold Monetization Scheme.
• They are issued by the RBI in different tranches during a financial year.
• These securities are made available via banks, brokers, post offices and online platforms.
• A discount of INR 50 per gram is offered to investors who purchase them digitally to promote buying SGBs online.
• Investors can either buy the bonds in physical, digital or dematerialized format.
• SGBs have a term of eight years and an interest rate of 2.5% per annum paid on a half-yearly basis.
• On maturity i.e. after 8 years, the Gold Bonds shall be redeemed in Indian Rupees and the redemption price shall be based on simple average of closing price of gold of previous 3 business days.
• Early encashment/redemption of the bond is allowed after fifth year from the date of issue on coupon payment dates.
• Every individual purchase is restricted to a maximum of 4kgs per financial year and in case of a trust, it is restricted to
• The only document mandatory for the purchase of SGBs is a PAN card without which no investment in these bonds is permitted.