Sovereign gold bonds (SGBs) are now open for subscription till Friday (August 26). The bonds in the second tranche of SGB Scheme 2022-23 are available for purchase at Rs 5,197 apiece from banks, NSE and BSE, among other authorised entities. However, investors can also buy the SGBs at a discount if they pay through the online mode. Here’re the details of the SGBs and how much you can get a discount:
What Are Sovereign Gold Bonds?
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 the Government of India.
The Issue Price of SGBs and How Can You Get A Discount?
The issue price of the SGB Series-II during the subscription period is Rs 5,197. However, if one makes the payment through online mode, investors can get a discount of Rs 50.
Payment for the SGBs will be through cash payment (up to a maximum of Rs 20,000) or demand draft or cheque or electronic banking.
“The Government of India in consultation with the Reserve Bank of India has decided to allow a discount of Rs 50 per gram from the issue price to those investors who apply online and the payment is made through digital mode. For such investors the issue price of Gold Bond will be Rs 5,147 per gram of gold,” the ministry said.
Who Can Buy the Bonds?
The sovereign gold bonds will be restricted for sale to resident individuals, hindu undivided families (HUFs), trusts, universities and charitable institutions.
How To Buy The SGBs?
The bonds will be sold through commercial banks, Stock Holding Corporation of India Limited (SHCIL), Clearing Corporation of India Limited (CCIL), designated post offices (as may be notified), National Stock Exchange and BSE, either directly or through agents.
Tenure
The tenure of the SGB will be for a period of eight years with an option of premature redemption after fifth year to be exercised on the date on which interest is payable.
SGBs As Collateral
The Reserve Bank of India in a notification of the bonds said, “Bonds can be used as collateral for loans. The loan-to-value (LTV) ratio is to be set equal to ordinary gold loan mandated by the Reserve Bank from time to time.”
In a frequently asked question also, it said, “Yes, these securities are eligible to be used as collateral for loans from banks, financial Institutions and Non-Banking Financial Companies (NBFC). The Loan to Value ratio will be the same as applicable to ordinary gold loan prescribed by RBI from time to time. Granting loan against SGBs would be subject to decision of the bank/financing agency, and cannot be inferred as a matter of right.”
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