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Sovereign Gold Bond Scheme 2018 -19-Series-I- Issue Price, Features

Government of India, in consultation with the Reserve Bank of India, has decided to issue Sovereign Gold Bond, 2018-19-Series-I. Applications for the bond will be accepted from April 16-20, 2018.

Date : Apr 13, 2018
Sovereign Gold Bond 2018-19 Series- I-Issue Price

In terms of GoI notification F.No.4(8)-W&M/2018 and RBI circular IDMD.CDD.No.2651/14.04.050/2017-18 dated April 13, 2018, the Sovereign Gold Bond Scheme 2018-19 – Series I will be opened for subscription for the period from April 16, 2018 to April 20, 2018. The nominal value of the bond based on the simple average closing price [published by the India Bullion and Jewellers Association Ltd (IBJA)] for gold of 999 purity of the last three business days of the week preceding the subscription period, i.e. April 11-13, 2018 works out to Rs. 3,114/- (Rupees Three Thousand One Hundred Fourteen only) per gram.

Government of India, in consultation with the Reserve Bank of India, has decided to offer a discount of ₹50 per gram less than the nominal value to those investors applying online and the payment against the application is made through digital mode. For such investors, the issue price of Gold Bond will be Rs. 3064/- (Rupees Three Thousand Sixty Four only) per gram of gold.

Ajit Prasad
Assistant Adviser

Press Release: 2017-2018/2738

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Date : Apr 13, 2018
Sovereign Gold Bond Scheme 2018 -19-Series-I

Government of India, in consultation with the Reserve Bank of India, has decided to issue Sovereign Gold Bond, 2018-19-Series-I. Applications for the bond will be accepted from April 16-20, 2018. The Certificate of Bond (s) will be issued on May 04, 2018. The Bonds will be sold through banks, Stock Holding Corporation of India Limited (SHCIL), designated post offices and recognised stock exchanges viz., National Stock Exchange of India Ltd and Bombay Stock Exchange, Ltd. The features of the Bond are given below:

Sl. No. Item Details
1 Product name Sovereign Gold Bond 2018-19 -Series-I
2 Issuance To be issued by Reserve Bank India on behalf of the Government of India.
3 Eligibility The Bonds will be restricted for sale to resident Indian entities including individuals, HUFs, Trusts, Universities and Charitable Institutions.
4 Denomination The Bonds will be denominated in multiples of gram(s) of gold with a basic unit of 1 gram.
5 Tenor The tenor of the Bond will be for a period of 8 years with exit option in 5th, 6th and 7th year, to be exercised on the interest payment dates.
6 Minimum size Minimum permissible investment will be 1 gram of gold.
7 Maximum limit The maximum limit of subscribed shall be 4 KG for individual, 4 Kg for HUF and 20 Kg for trusts and similar entities per fiscal (April-March) notified by the Government from time to time. A self-declaration to this effect will be obtained. The annual ceiling will include bonds subscribed under different tranches during initial issuance by Government and those purchase from the Secondary Market.
8 Joint holder In case of joint holding, the investment limit of 4 KG will be applied to the first applicant only.
9 Issue price Price of Bond will be fixed in Indian Rupees on the basis of simple average of closing price of gold of 999 purity published by the India Bullion and Jewellers Association Limited 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.
10 Payment option Payment for the Bonds will be through cash payment (upto a maximum of Rs. 20,000) or demand draft or cheque or electronic banking.
11 Issuance form The Gold Bonds will be issued as Government of India Stocks under GS Act, 2006. The investors will be issued a Holding Certificate for the same. The Bonds are eligible for conversion into demat form.
12 Redemption price The redemption price will be in Indian Rupees based on simple average of closing price of gold of 999 purity of previous 3 working days published by IBJA.
13 Sales channel Bonds will be sold through banks, Stock Holding Corporation of India Limited (SHCIL), designated post offices as may be notified and recognised stock exchanges viz., National Stock Exchange of India Ltd and Bombay Stock Exchange Ltd, either directly or through agents.
14 Interest rate The investors will be compensated at a fixed rate of 2.50 per cent per annum payable semi-annually on the nominal value.
15 Collateral 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. The lien on the bond shall be marked in the depository by the authorised banks.

Note: The loan against SGBs would be subject to decision of the bank/financing agency, and cannot be inferred as a matter of right.

16 KYC Documentation Know-your-customer (KYC) norms will be the same as that for purchase of physical gold. KYC documents such as Voter ID, Aadhaar card/PAN or TAN /Passport will be required.
17 Tax treatment The interest on Gold Bonds shall be taxable as per the provision of Income Tax Act, 1961 (43 of 1961). The capital gains tax arising on redemption of SGB to an individual has been exempted. The indexation benefits will be provided to long term capital gains arising to any person on transfer of bond
18 Tradability Bonds will be tradable on stock exchanges within a fortnight of the issuance on a date as notified by the RBI.
19 SLR eligibility Bonds acquired by the banks through the process of invoking lien/hypothecation/pledge alone, shall be counted towards Statutory Liquidity Ratio.
20 Commission Commission for distribution of the bond shall be paid at the rate of 1% of the total subscription received by the receiving offices and receiving offices shall share at least 50% of the commission so received with the agents or sub agents for the business procured through them.

Ajit Prasad
Assistant Adviser

Press Release: 2017-2018/2737

Categories: Fema / RBI

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