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The Central government on Thursday announced the calendar for Sovereign Gold Bonds that will be issued in four tranches, starting October 25, 2021. The Sovereign Gold Bonds will be sold through scheduled commercial banks, Stock Holding Corporation of India Limited (SHCIL), Clearing Corporation of India Limited (CCIL), designated post offices, and recognised stock exchanges, according to the ministry of finance. Small finance banks and payment banks will not sell these bonds.
Issued by the Reserve Bank of India (RBI) on behalf of the government, the sale of bonds will be restricted to citizens, HUFs, Trusts, Universities and charitable institutions. The bonds will be denominated in multiples of gram(s) with 1 gram of gold as the minimum permissible investment.
The subscribers can make cash payments for up to ₹20,000 worth of SGB while bigger payments will be accepted through demand draft, cheque or electronic banking. The issue price will be fixed on the basis of an average of the closing price of gold of 999 purity for the last 3 working days of the week preceding the subscription period. The subscribers will get a discount of ₹50 per gram if the payment is made net banking online or other digital modes.
The SGBs can be used as collateral for loans, with the loan-to-value ratio equal to ordinary gold loans mandated by the RBI from time to time.
The subscribers will be paid at a fixed interest rate of 2.50% per annum payable semi-annually on the nominal value, which will be taxable as per the provision of the Income Tax Act, 1961.
