The fourth tranche of Sovereign Gold Bonds (SGB) will be available for subscription today (February 12) at a price of Rs 6,263 per gram. According to the Reserve Bank of India (RBI), the SGB issuance will end on Friday, February 16, 2024. The SGB release date has been set for Wednesday, February 21, 2024.
Investors who apply online will get a discount of Rs 50 per gram and the issue price remains at Rs 6,213 per gram. The sovereign gold bonds will be sold through various channels, including post offices, scheduled commercial banks and stock exchanges. Sovereign gold bonds can be paid by cash (up to Rs 20,000), demand draft, check or e-banking.
According to a report by the Indian Bullion and Jewelers Association Ltd (IBJA), the SGB price is determined by taking a simple average of the closing 999 purity gold prices of the previous three working days. The three working days in this example are February 7 to February 9, 2024.
What are the advantages of SGB?
The amount of gold paid is protected and investors receive the current market price upon redemption or early redemption. Additionally, there are no risks or costs associated with storage. There are also no manufacturing costs or purity issues that exist with gold in jewelry form. The Reserve Bank of India holds bonds in demat form on its books, so there are no losses on stocks etc.
The Reserve Bank of India guarantees investors the market value of gold at maturity along with periodic interest. According to the Reserve Bank of India, if the market price of gold falls, an investor may suffer a loss of principal, but he will not lose gold in terms of the units he has paid.
In December 2023, the Reserve Bank of India announced a plan to issue two tranches of sovereign gold bonds in 2023-24. The first tranche was issued in December and the second tranche was issued in February. It is now open for subscription.
SGB can only be sold to resident individuals, HUFs, trusts, universities and charities. Gold bonds are priced in grams of gold, with one gram as the basic unit. The bond has a term of 8 years, with the option of early redemption after the 5th year and can be exercised on the interest payment date.
According to the regulations announced by the government, the minimum investment allowed is 1 gram of gold and the maximum subscription limit per financial year (April to March) is 4 kg for individuals, 4 kg for HUF and 20 kg for trusts and similar entities . In case of joint ownership, the investment limit of 4 kg applies only to the first applicant.
In order to reduce the demand for physical gold and convert some of the domestic savings previously used to purchase gold into financial savings, the Sovereign Gold Bond Scheme was launched in November 2015.
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