The Government of India(GoI), in consultation with the Reserve Bank of India, has decided to issue Sovereign Gold Bonds for FY22. The Sovereign Gold Bonds will be issued in 6 tranches from May 2021 to September 2021.
Channels that sell bonds:
i.The Bonds will be sold through Scheduled Commercial banks (except Small Finance Banks and Payment Banks), Stock Holding Corporation of India Limited (SHCIL), designated post offices.
ii.It will also be sold through recognised stock exchanges viz., National Stock Exchange of India Limited and Bombay Stock Exchange Limited.
iii.Payment Options – Payment for gold bonds could be made through cash (upto ₹ 20000)/cheques/demand draft/electronic fund transfer.
About Sovereign Gold Bond FY22:
| Item | Details |
|---|---|
| Issuance | Issued by RBI on behalf of the Government of India |
| Eligibility | Restricted for sale to resident individuals, Hindu Undivided Family (HUFs), Trusts, Universities, and Charitable Institutions |
| Denomination | Denominated in multiples of gram(s) of gold with a basic unit of 1 gram |
| Tenor | 8 years with exit option after 5th year (to be exercised on the next interest payment dates) |
| Minimum permissible investment | 1 gram of gold |
| Maximum limit | 4 KG – individual, HUF and 20 Kg – trusts and similar entities for an FY(April-March) Note – For joint holding, the investment limit of 4 KG will be applied to the first applicant only |
| Issue price | It will be fixed in Indian Rupees based on a simple average of the closing price of gold of 999 purity, published by the India Bullion and Jewellers Association Limited (IBJA Ltd) for the last 3 working days of the week preceding the subscription period. (The issue price of the Gold Bonds will be `50 per gram less for those who subscribe online and pay through digital mode) |
| Redemption price | It will be in Indian Rupees based on a simple average of the closing price of gold of 999 purity, of previous 3 working days published by IBJA Ltd |
| Interest rate | The investors will be compensated at a fixed rate of 2.50 percent per annum, payable semi-annually on the nominal value |
| Collateral | Bonds can be used as collateral for loans |
| Tradability | Bonds will be tradable on stock exchanges within a fortnight of the issuance on a date as notified by the RBI |
Recent Related News:
The government of India has promulgated an Ordinance titled ‘The Insolvency and Bankruptcy Code (Amendment) Ordinance, 2021’ to allow ‘pre-packaged insolvency resolution process (PIRP)’ to Micro, Small & Medium Enterprises (MSME).
About Sovereign gold bonds:
i.They are the government securities denominated in grams of gold and they are issued by the RBI on behalf of the government.
ii.To reduce the demand for physical gold, the sovereign gold bond scheme was launched in November 2015.
iii.To buy the gold bonds, the investors have to pay the issue price in cash and the bonds will be redeemed in cash on maturity.
iv.Advantage: Sovereign gold bonds are one of the better ways of investing in gold as along with capital appreciation the investors will get a fixed rate of interest.
v.Disadvantage: It is a long term investment, unlike physical gold which can be sold immediately.
