Introduction: The Government of India, in consultation with the Reserve Bank of India (RBI), has announced the Sovereign Gold Bond Scheme 2023-24 Series IV, marking another opportunity for investors to diversify their investment portfolios. Scheduled for subscription from February 12 to February 16, 2024, this tranche comes with an attractive proposition for those looking to invest in gold as a financial asset. With the issue price set based on the average gold price, and a special discount for online subscriptions, the scheme not only promotes digital transactions but also provides a cost-effective way to invest in gold.
Detailed Analysis
Issue Price Determination: The nominal value of the bond for the upcoming Series IV is determined at ₹6,263 per gram of gold. This pricing is based on the simple average of the closing price for gold of 999 purity, as published by the India Bullion and Jewellers Association Ltd (IBJA), for the last three working days of the week preceding the subscription period. In a move to encourage digital payments and online applications, the government offers a discount of ₹50 per gram. Thus, for investors applying online and making the payment through digital modes, the issue price is slightly lower, at ₹6,213 per gram of gold.
Subscription and Eligibility: The Sovereign Gold Bond Scheme is available to a wide range of investors, including individuals, Hindu Undivided Families (HUFs), Trusts, Universities, and Charitable Institutions. It sets a minimum subscription limit at one gram of gold and caps the annual investment at 4 kg for individuals and HUFs, and 20 kg for trusts and other eligible entities. The bonds, which have an eight-year tenor with an option for premature redemption after the fifth year, will be issued by the RBI on behalf of the Government of India.
Benefits and Features: Investors in the Sovereign Gold Bond Scheme can enjoy several benefits, including a fixed interest rate of 2.50 percent per annum, payable semi-annually on the nominal value. Additionally, the bonds can be used as collateral for loans, and the capital gains tax arising on redemption is exempt for individuals. The scheme also provides an avenue for investors to avoid the risks and costs associated with physical gold storage, while still gaining exposure to the gold market.
Conclusion: The Sovereign Gold Bond Scheme 2023-24 Series IV presents a compelling investment opportunity, particularly for those looking to diversify their portfolio with gold. The combination of a fixed return, the security of government backing, and the added convenience and savings of online subscriptions make it an attractive option. By aligning the interests of investors with the broader goals of digitalization and financial inclusion, the scheme underscores the government’s commitment to innovative and accessible investment avenues. Prospective investors are encouraged to consider their investment goals and consult with financial advisors to make the most of this opportunity.
*****
Reserve Bank of India
Sovereign Gold Bond Scheme 2023-24 Series IV – Issue Price
In terms of Government of India Notification F.No.4(6)-B(W&M)/2023 and Reserve Bank press release dated December 08, 2023, the Sovereign Gold Bond Scheme 2023-24 – Series IV will be open for subscription during February 12–16, 2024. The nominal value of the bond based on the simple average of closing price [published by the India Bullion and Jewellers Association Ltd (IBJA)] for gold of 999 purity of the last three working days of the week preceding the subscription period, i.e. February 07, February 08 and February 09, 2024 works out to ₹6,263/- (Rupees Six thousand two hundred and sixty three only) per gram of gold.
Government of India, in consultation with the Reserve Bank, has decided to offer a discount of ₹50/- per gram less than the nominal value to those investors applying online and making the payment against the application through digital mode. For such investors, the issue price of Gold Bond will be ₹6,213/- (Rupees Six thousand two hundred and thirteen only) per gram of gold.
Ajit Prasad
Director (Communications)
Press Release: 2023-2024/1849
Date : Dec 08, 2023
Sovereign Gold Bond Scheme 2023-24
Government of India, in consultation with the Reserve Bank of India, has decided to issue Sovereign Gold Bonds (SGBs) in tranches as per the calendar specified below:
|
S. No. |
Tranche | Date of Subscription | Date of Issuance |
| 1. | 2023-24 Series III | December 18 – December 22, 2023 | December 28, 2023 |
| 2. | 2023-24 Series IV | February 12 – February 16, 2024 | February 21, 2024 |
The SGBs will be sold through Scheduled Commercial banks (except Small Finance Banks, Payment Banks and Regional Rural Banks), Stock Holding Corporation of India Limited (SHCIL), Clearing Corporation of India Limited (CCIL), designated post offices, and recognised stock exchanges, viz., National Stock Exchange of India Limited and Bombay Stock Exchange Limited. The features of the SGBs are as under:
|
Sl. No. |
Item | Details |
| 1 | Product name | Sovereign Gold Bond Scheme 2023-24 |
| 2 | Issuance | To be issued by the Reserve Bank of India on behalf of the Government of India. |
| 3 | Eligibility | The SGBs will be restricted for sale to resident individuals, HUFs, Trusts, Universities and Charitable Institutions. |
| 4 | Denomination | The SGBs will be denominated in multiples of gram(s) of gold with a basic unit of One gram. |
| 5 | Tenor | The tenor of the SGB will be for a period of eight years with an option of premature redemption after 5th year to be exercised on the date on which interest is payable. |
| 6 | Minimum size | Minimum permissible investment will be One gram of gold. |
| 7 | Maximum limit | The maximum limit of subscription shall be 4 Kg for individual, 4 Kg for HUF and 20 Kg for trusts and similar entities per fiscal year (April-March), as notified by the Government from time to time. A self-declaration to this effect will be obtained from the investors at the time of making an application for subscription. The annual ceiling will include SGBs subscribed under different tranches, and those purchased from the secondary market, during the fiscal year. |
| 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 SGB 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 (IBJA) for the last three working days of the week preceding the subscription period. The issue price of the SGBs will be less by ₹50 per gram for the investors who subscribe online and pay through digital mode. |
| 10 | Payment option | Payment for the SGBs will be through cash payment (upto a maximum of ₹20,000) or demand draft or cheque or electronic banking. |
| 11 | Issuance form | The SGBs will be issued as Government of India Stock under the Government Securities Act, 2006. The investors will be issued a Certificate of Holding for the same. The SGBs will be 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 three working days published by IBJA Ltd. |
| 13 | Sales channel | SGBs will be sold through Scheduled Commercial banks (except Small Finance Banks, Payment Banks and Regional Rural Banks), Stock Holding Corporation of India Limited (SHCIL), Clearing Corporation of India Limited (CCIL), designated post offices (as may be notified) and recognised stock exchanges viz., National Stock Exchange of India Limited and Bombay Stock Exchange Limited, either directly or through agents. |
| 14 | Interest rate | The investors will be compensated at a fixed rate of 2.50 percent per annum payable semi-annually on the nominal value. |
| 15 | Collateral | The SGBs can be used as collateral for loans. The loan-to-value (LTV) ratio will be as applicable to any 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 SGBs 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 is exempted. The indexation benefits will be provided to long term capital gains arising to any person on transfer of the SGB. |
| 18 | Tradability | SGBs shall be eligible for trading. |
| 19 | SLR eligibility | SGBs 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 SGB shall be paid at the rate of one percent of the total subscription received by the receiving offices and receiving offices shall share at least 50 percent of the commission so received with the agents or sub agents for the business procured through them. |
(Yogesh Dayal)
Chief General Manager
Press Release: 2023-2024/1456
Government of India
Ministry of Finance
Department of Economic Affairs
New Delhi, dated the December 08, 2023
Notification
G.S.R.—- (E). — In exercise of the powers conferred by clause (iii) of Section 3 of the Government Securities Act, 2006 (38 of 2006), the Central Government hereby makes the following Scheme, namely:
1. Short title and commencement-
(i) This scheme may be called the Sovereign Gold Bond Scheme 2023-24.
(ii) There will be a distinct Series (starting from Series III) which will be indicated on the Bond issued to the investor.
(iii) It shall come into force on the date of its publication in the Official Gazette.
2. Definition-
In this Scheme, unless the context otherwise requires:
a) “Form” means a form appended to this Scheme.
b) “Receiving office” means the offices or branches of Nationalised Banks, Scheduled Private Banks, Scheduled Foreign Banks (as specified in Annexure I to this Notification), designated Post Offices (as specified in Annexure II to this Notification), Stock Holding Corporation of India Ltd. (SHCIL), the authorised stock exchanges, and Clearing Corporation of India Limited (CCIL) or any other entity as may be approved by RBI as specified in Annexure III to this Notification.
c) “Stock Certificate” means the Gold Bond issued in the form of Government of India Stock in accordance with Section 3 of the Government Securities Act, 2006.
3. Eligibility for Investment-
The Gold Bonds issued under this Scheme may be held by a Trust, HUFs, Charitable Institution, University or 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.
Explanation— For the purposes of this paragraph:
(i) “person” shall have the same meaning as defined in clause (u) of Section 2 of the Foreign Exchange Management Act, 1999 (42 of 1999).
(ii) the expression “person resident in India” shall have the same meaning as defined in clause (v) of Section 2 of the Foreign Exchange Management Act, 1999 (42 of 1999).
(iii) “Trust” means a trust constituted/formed as per the Indian Trusts Act, 1882, or a public or private trust constituted or recognized under the provisions of any Central or State law for the time being in force and also an express or constructive trust constituted for either a public religious or charitable purpose or both which includes a temple, a math, a wakf, a church, a synagogue, agiary or any other place of public religious worship, or a dharmada or any other religious or charitable endowment and also a society, formed either for a religious or charitable purpose or for both, registered under the Societies Registration Act, 1860 or under any other law for the time being in force in India.
(iv) “Charitable Institution” means a company registered under Section 25 of the Indian Companies Act, 1956 or under Section 8 of the Companies Act, 2013; or an institution, which has obtained a Certificate of Registration as a charitable institution in accordance with a law in force; or Any institution which has obtained a certificate from an Income Tax Authority for the purposes of Section 80G of the Income Tax Act, 1961.
(v) “University” means a university established or incorporated by a Central, State or Provincial Act, and includes an institution declared under Section 3 of the University Grants Commission Act, 1956 (3 of 1956), to be a university for the purposes of the Act
4. Denomination, Subscription limit and Pricing-
(i) The bonds will be issued in denominations of one gram of gold or multiples thereof.
Provided that the minimum limit of subscription for the Bonds issued shall be of one gram and maximum limit of subscription per fiscal year shall be of four kg for individuals, four kg for Hindu Undivided Family (HUF) and 20 kg for trusts and similar entities notified by the Government from time to time;
Provided that in case of joint holding, the above limits shall be applicable to the first applicant only;
Provided that the annual ceiling will include bonds subscribed under different tranches during initial issuance by Government and those purchased from the secondary market; and
Provided further that the ceiling on investment will not include the holdings as collateral by banks and other Financial Institutions.
(ii) The nominal value of Gold Bonds shall be 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.
(iii) The issue price of the Gold Bonds will be less than the nominal value by ?50 per gram to those investors applying online and making the payment against the application through digital mode.
5. Procedure for making application for subscription to Gold Bonds-
(i) Any person who is desirous of subscribing to the Gold Bonds shall apply to any Receiving office in Form ‘A’ or in any other form as near as thereto, clearly stating the grams of gold, full name and address of the applicant/s.
(ii) Every application shall contain such documents and particulars as specified in the instructions contained in the Application Form.
(iii) Every application must be accompanied by the ‘PAN Number’ issued by the Income Tax Department to Individuals and other entities.
(iv) On receipt of an application under sub paragraph (i), the Receiving office shall issue an acknowledgment receipt in Form ‘B’ if all requirements of the application are fulfilled.
(v) An incomplete application is liable to be rejected.
6. Date and form of issue of Gold Bonds-
(i) The Gold Bonds shall be issued in the form of a Stock Certificate, as specified in Form ‘C’ on the date of issue of respective tranches as mentioned in the para 8 of this Notification.
(ii) The Gold Bonds shall be eligible to be converted into Demat form.
7. Period of subscription-
The subscription to the Gold Bonds under this Scheme shall remain open as specified in Section 8 below.
Provided that the Central Government may, with prior notice, close the Scheme at any time before the period specified above.
8. Calendar of Issuance-
| S. No. | Tranche | Period of Subscription | Date of Issue |
| – 1. | 2023-24 Series III | December 18 — December 22, 2023 | December 28, 2023 |
| 2. | 2023-24 Series IV | February 12 — February 16, 2024 | February 21, 2024 |
9. Interest-
(i) The interest on the Gold Bonds shall commence from the date of issue and shall be paid at a fixed rate of 2.50 percent per annum on the nominal value of the bond.
(ii) The interest shall be payable in half-yearly rests and the last interest shall be payable along with the principal on maturity.
10. Receiving Offices-
The Receiving Offices shall be authorised to receive applications for the bonds either directly or through agents.
11. Payment Options-
(i) All payments for Gold Bonds shall be accepted in Indian Rupees through cash (up to a maximum of U0,000/-) or demand draft, or cheque, or electronic banking.
(ii) Where payment is made through cheque or demand draft, the same shall be drawn in favour of the Receiving Office.
12. Redemption-
(i) The Gold Bonds shall be repayable on the expiration of eight years from the date of the issue of the Bonds:
Provided that premature redemption of Gold Bonds may be permitted after fifth year from the date of issue of Bonds and such repayments will be made on the date on which interest is payable,
(ii) On maturity/premature redemption, the Gold Bonds shall be redeemed in Indian Rupees and the redemption price shall be based on simple average of closing price of gold of 999 purity of previous three working days, published by the India Bullion and Jewellers Association Limited.
(iii) The RBI / depository shall inform the investor one month in advance, about the date of maturity of the Bond.
13. Eligibility for Statutory Liquidity Ratio-
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-
(i) The Gold Bonds issued under this Scheme may be used as collateral security for availing any loan. Such loans could be granted by marking lien on Gold Bonds appropriately.
(ii) The Loan to Value ratio as applicable to any ordinary gold loan mandated by the Reserve Bank of India shall also apply to the Bonds issued under this Scheme.
Note: The loan against Gold Bonds would be subject to decision of the bank/financing agency, and cannot be inferred as a matter of right
15. Tax Treatment-
The interest received on the Gold Bond shall be taxable as per the provisions of the Income-tax Act, 1961 (43 of 1961). The capital gains tax arising on redemption of these bonds to an individual is exempted. The indexation benefits will be provided for the long-term capital gains arising to any person on transfer of bond.
16. Nomination-
(i) 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 the December 2007.
(ii) An individual Non-Resident Indian may get the security transferred in his name on account of he being a nominee of a deceased investor;
Provided that the Non-Resident investor shall need to hold the security till premature redemption or till maturity;
Provided further that the interest and maturity proceeds of the investment shall not be repatriable.
17. Transfer of Gold Bonds
The Gold Bonds issued in the form of Stock Certificate are 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 the 1′ December 2007.
18. Trading of Gold Bonds-
The Gold Bonds shall be eligible for trading.
19. Commission for mobilizing subscription-
The commission for mobilising subscription towards these bonds shall be paid at the rate of Rupee One per Hundred Rupees 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.
20. All other terms and conditions specified in the notification of Government of India, Ministry of Finance (Department of Economic Affairs) vide number F. No.4 (2) W&M/2018, dated the 27th March, 2018 shall apply to the Gold Bond issued under this scheme.
By Order of the President of India
[F. No. 4(6)-B(W8tM)/2023]
(Ashish Vachhani)
Additional Secretary to the Government of India
Dated: December 08, 2023
