Reserve Bank of India

RBI/2018-19/193
IDMD.CDD.No.3391/14.04.050/2018-19

May 30, 2019

The Chairman & Managing Director
All Scheduled Commercial Banks
(Excluding RRBs)
Designated Post Offices
Stock Holding Corporation of India ltd.(SHCIL)
National Stock Exchange of India Ltd. & Bombay Stock Exchange Ltd.

Dear Sir/Madam,

Sovereign Gold Bond Scheme 2019-20 – Series I/II/III/IV – Operational Guidelines

This has reference to the GoI notification F.No. 4(7)-W&M/2019 dated May 30, 2019 and RBI circular IDMD. CDD. No.  3392/14.04.050/2018-19 dated May 30, 2019 on the Sovereign Gold Bonds. FAQs in this regard have been placed on our website (www.rbi.org.in). Operational guidelines with regard to this scheme are given below:

1. Application

Application forms from investors will be received at branches during normal banking hours on the weeks of subscription. Receiving Offices need to ensure that the application is complete in all respects as incomplete applications are liable to be rejected. Relevant additional details may be obtained from the applicants, where necessary. The Receiving Offices may make arrangements to enable the investors to apply online, in the interest of better customer service.

2. Joint holding and nomination

Multiple joint holders and nominees (of first holder) are permitted. Necessary details may be obtained from the applicants as per practice. An individual Non-resident Indian may get the security transferred in his/her name on account of he/she being a nominee of a deceased investor provided that:

i. the Non-Resident investor shall need to hold the security till early redemption or till maturity; and

ii. the interest and maturity proceeds of the investment shall not be repatriable.

3. Know-Your-Customer (KYC) requirements

Every application must be accompanied by the ‘PAN details’ issued by the Income Tax Department to the investor(s). It may be ascertained from the investor, if he/she has made a previous investment in SGBs or IINSC-C and hence in possession of an Investor ID. If so, the investments may be made under the unique Investor ID only.

4. Cancellation

Cancellation of application is permitted till the closure of the issue, i.e. until Friday of the particular week of subscription. Part cancellation of submitted request for purchase of gold bonds is not permitted.

5. Lien marking

As the bonds are government securities, lien marking, etc. will be as per the extant legal provisions of Government Securities Act, 2006 and rules framed there under. The lien shall be marked by the Receiving Offices/Public Debt Offices of RBI in case of financing by agencies other than the Receiving Offices.

6. Agency arrangement

Receiving Offices may engage NBFCs, NSC agents and others to collect application forms on their behalf. Banks may enter into arrangements or tie-ups with such entities. Commission for distribution shall be paid at the rate of Rupee one per hundred of the total subscription received by the Receiving Offices on the applications received 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.

7. Processing through RBI’s e-Kuber system

Sovereign Gold Bonds will be available for subscription at the Receiving Offices through RBI’s e- Kuber system. The e-Kuber system can be accessed either through INFINET or Internet. The Receiving Offices need to enter the data or carry out bulk upload for the subscriptions received by them. They may ensure accuracy of entry of data to prevent occurrence of any inadvertent errors. An immediate confirmation will be provided to them for receipt of application. In addition, a confirmation scroll will be provided for file uploads to enable the Receiving Offices to update their database. On the date of allotment, Certificates of Holding will be generated for all the subscriptions in the name of the sole/principal holder. The Receiving Offices can download the same and take printouts. The Certificates of Holding will also be sent through e-mail to the investors who have provided their email address. The securities will be credited in their de-mat accounts by the depositories in due course subject to matching of particulars furnished in the application with the depositories’ records.

8. Printing Certificates of Holding

Holding Certificate needs to be printed in colour on A4 size 100 GSM paper.

9. Servicing and follow up

Receiving Offices will “own” the customer and provide necessary services with regards to this bond e.g. update contact details, receive requests for premature encashment, etc. Receiving Offices will be required to preserve applications till the bonds are matured and are repaid.

10. Tradability

The Bonds shall be eligible for trading on a date notified by the Reserve Bank of India. (It may be noted that only bonds held in demat form with depositories can be traded in stock exchanges)

11. Contact details

Any queries/clarifications may be e-mailed to the following:

(a) Sovereign Gold Bond related: Please click here to send email.

(b) IT related: Please click here to send email.

Yours faithfully,

(Raksha Mishra)
General Manager

————————————————————-

Sovereign Gold Bond Scheme (SGB) 2019-20- Series I/II/III/IV

RBI/2018-19/192
IDMD.CDD.No.3392/14.04.050/2018-19

May 30, 2019

The Chairman & Managing Director
All Scheduled Commercial Banks,
(Excluding RRBs)
Designated Post Offices
Stock Holding Corporation of India Ltd. (SHCIL)
National Stock Exchange of India Ltd. & Bombay Stock Exchange Ltd.

Dear Sir/Madam,

Sovereign Gold Bond Scheme (SGB) 2019-20- Series I/II/III/IV

Government of India has vide its Notification F.No. 4(7)-W&M/2019 dated May 30, 2019 announced the Sovereign Gold Bond Scheme 2019-20- Series I/II/III/IV. Under the scheme there will be a distinct series (starting from Series I) for every tranche which will be indicated on the Bond issued to the investor. The Government of India may, with prior notice, close the Scheme before the specified period. The terms and conditions of the issuance of the Bonds shall be as follows:

1. Eligibility for Investment:

The Bonds under this Scheme may be held by a person resident in India, being an individual, in his capacity as such individual, or on behalf of minor child, or jointly with any other individual. The bond may also be held by a Trust, HUFs, Charitable Institution and University. “Person resident in India” is defined under clause (v) of section 2 of the Foreign Exchange Management Act, 1999 (42 of 1999).

2. Form of Security

The Bonds shall be issued in the form of Government of India Stock in accordance with section 3 of the Government Securities Act, 2006. The investors will be issued a Holding Certificate (Form C). The Bonds shall be eligible for conversion into de-mat form.

3. Date of Issue

The date of issuance shall be as per the details given in Para 7.

4. Denomination

The Bonds shall be denominated in units of one gram of gold or multiples thereof. Minimum investment in the Bonds shall be one gram with a maximum limit of subscription per fiscal year of 4 kg for individuals, 4 kg for Hindu Undivided Family (HUF) and 20 kg for trusts and similar entities notified by the government from time to time

provided that

i. in case of joint holding, the above limits shall be applicable to the first applicant only;

ii. annual ceiling will include bonds subscribed under different tranches during initial issuance by Government and those purchased from the secondary market; and

iii. the ceiling on investment will not include the holdings as collateral by banks and other Financial Institutions.

5. Issue Price

The nominal value of the Bonds shall be fixed in Indian Rupees fixed 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 than the nominal value to those investors applying online and the payment against the application is made through digital mode.

6. Period of subscription.-

The Subscription of the Gold Bonds under this Scheme shall be open as specified in Section 7 below.

Provided that the Central Government may, with prior notice, close the Scheme at any time before the period specified above

7. Calendar of Issuance.-

S.No. Tranche Date of Subscription Date of Issuance
1 2019-20 Series I June 03-07, 2019 June 11, 2019
2 2019-20 Series II July 08-12, 2019 July 16, 2019
3 2019-20 Series III August 05-09, 2019 August 14, 2019
4 2019-20 Series IV September 09-13, 2019 September 17, 2019

8. Interest

The Bonds shall bear interest from the date of issue at the rate of 2.50 percent (fixed rate) per annum on the nominal value. Interest shall be paid in half-yearly rests and the last interest shall be payable along with principal on maturity.

9. Receiving Offices

Scheduled Commercial Banks (excluding RRBs, Small Finance Banks and Payment Banks), designated Post Offices (as may be notified), Stock Holding Corporation of India Ltd (SHCIL) and recognized stock exchanges viz., National Stock Exchange of India Limited and Bombay Stock Exchange Ltd. are authorized to receive applications for the Bonds either directly or through agents.

10. Payment Options

Payment shall be accepted in Indian Rupees through cash up to a maximum of ₹ 20,000/- or Demand Drafts or Cheque or Electronic banking. Where payment is made through cheque or demand draft, the same shall be drawn in favour of the Receiving Office.

11. Redemption

i) The Bonds shall be repayable on the expiration of eight years from the date of issue of the Bonds. Pre-mature redemption of the Bond is permitted after fifth year of the date of issue of the Bonds and such repayments shall be made on the next interest payment date.

ii) The redemption price shall be fixed in Indian Rupees and the redemption price shall be based on simple average of closing price of gold of 999 purity of the previous 3 working days, published by the India Bullion and Jewelers Association Limited.

12. Repayment

RBI/depository shall inform the investor about the date of maturity of the Bond one month before its maturity.

13. Eligibility for Statutory Liquidity Ratio (SLR)

Bonds acquired by the banks through the process of invoking lien/hypothecation/pledge alone shall be counted towards Statutory Liquidity Ratio.

14. Loan against Bonds

The Bonds may be used as collateral for loans. The Loan to Value ratio will be as applicable to ordinary gold loan mandated by the RBI from time to time. The lien on the Bonds shall be marked in the depository by the authorized banks. The loan against SGBs would be subject to decision of the lending bank/institution, and cannot be inferred as a matter of right by the SGB holder.

15. Tax Treatment

Interest on the Bonds shall be taxable as per the provisions of the 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.

16. Applications

Subscription for the Bonds may be made in the prescribed application form (Form ‘A’) or in any other form as near as thereto, stating clearly the grams of gold and the full name and address of the applicant. Every application must be accompanied by the ‘PAN details’ issued by the Income Tax Department to the investor(s). The Receiving Office shall issue an acknowledgment receipt in Form ‘B’ to the applicant.

17. Nomination

Nomination of and its cancellation shall be made in Form ‘D’ and Form ‘E’, respectively, in accordance with the provisions of the Government Securities Act, 2006 (38 of 2006) and the Government Securities Regulations, 2007, published in part III, Section 4 of the Gazette of India dated December 1, 2007. An individual Non – resident Indian may get the security transferred in his name on account of his being a nominee of a deceased investor provided that:

  1. the Non-Resident investor shall need to hold the security till early redemption or till maturity; and
  2. the interest and maturity proceeds of the investment shall not be repatriable.

18. Transferability

The Bonds issued in the form of Stock Certificate shall be transferable by execution of an Instrument of transfer as in Form ‘F’, in accordance with the provisions of the Government Securities Act, 2006 (38 of 2006) and the Government Securities Regulations, 2007, published in part III, Section 4 of the Gazette of India dated December 1, 2007.

19. Tradability of bonds

The Bonds shall be eligible for trading from such date as may be notified by the Reserve Bank of India.

20. Commission for mobilizing subscription

Commission for mobilizing subscription shall be paid at the rate of Rupee one per hundred of the total subscription received by the receiving offices on the applications received 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.

21. All other terms and conditions specified in the notification of Government of India in the Ministry of Finance (Department of Economic Affairs) vide number F. No.4(2) W&M/2018, dated 27th March 2018 shall apply to the Bonds.

22. Operational guidelines relating to Sovereign Gold Bonds are issued vide circular IDMD.CDD.No.3391/14.04.050/2018-19 dated May 30, 2019.

Yours faithfully,

(Raksha Mishra)
General Manager

Encls.: As above.

————————————————————-

Sovereign Gold Bond Scheme 2019-20

Date : May 30, 2019

Government of India, in consultation with the Reserve Bank of India, has decided to issue Sovereign Gold Bonds. The Sovereign Gold Bonds will be issued every month from June 2019 to September 2019 as per the calendar specified below:

S.No. Tranche Date of Subscription Date of Issuance
1 2019-20 Series I June 03-07, 2019 June 11, 2019
2 2019-20 Series II July 08–12, 2019 July 16, 2019
3 2019-20 Series III August 05-09, 2019 August 14, 2019
4 2019-20 Series IV September 09-13, 2019 September 17, 2019

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, and recognised stock exchanges viz., National Stock Exchange of India Limited and Bombay Stock Exchange Limited.

The features of the Bond are:

Sl. No. Item Details
1 Product name Sovereign Gold Bond 2019-20
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 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 after 5th 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 purchased 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 ₹ 20,000) or demand draft or cheque or electronic banking.
11 Issuance form The Gold Bonds will be issued as Government of India Stock 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 previous 3 working days simple average of closing price of gold of 999 purity published by IBJA.
13 Sales channel Bonds will be sold through Commercial 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 Limited and Bombay Stock Exchange, 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.
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. Every application must be accompanied by the ‘PAN Number’ issued by the Income Tax Department to individuals and other entities.
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 : 2018-2019/2812

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One Comment

  1. Raghavan K says:

    Is it mandatory to have a demat a/c for buying SGBs?
    Is it possible to link demat a/c to SGB at later stage? If yes, then what’s the procedure?

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