The first tranche of Sovereign Gold Bonds 2021-22 Sovereign Gold Bond Scheme 2021-22, which will open for subscription for five days from May 17, has been fixed at ₹4,777 per gram, the Reserve Bank of India said on Friday.
What is Sovereign Gold Bond (SGB)
SGBs are government-issued securities that are thought to be safe. Their worth is measured in multiples of gold grams.
SGBs have seen a significant increase in investors, as they are seen as a viable alternative to physical gold.
The government has decided to issue the bonds in six tranches from May 2021 to September 2021.
How the value derived?
The bond’s nominal value, calculated using the simple average closing price for gold of 999 purity on the last three business days of the week preceding the subscription period, i.e. May 11, May 12, and May 14, 2021 (May 13, 2021 being a holiday), is Rs 4,777/- per gram.
is there any discount?
Yes, The Government of India, in consultation with the Reserve Bank of India, has decided to offer a discount of Rs 50 per gram below the nominal value to the investors who apply online and pay using digital means.
The issue price of a Gold Bond for such investors will be Rs 4,727/- per gram of gold.
Who can issue Gold Bond?
Banks (except Small Finance Banks and Payment Banks), Stock Holding Corporation of India Limited (SHCIL), designated post offices, and recognized stock exchanges, such as the National Stock Exchange of India Limited and the Bombay Stock Exchange Limited, will sell the bonds.
Maturity
The bond will have an 8-year tenor, with an exit option after the fifth year that can be exercised on the next interest payment dates.
Subscription lots
The minimum amount of gold that can be invested is one gram. Individuals have a maximum subscription limit of 4 kg.
However, HUFs have a maximum subscription limit of 4 kg, and trusts and similar entities have a maximum subscription limit of 20 kg per fiscal year (April-March).
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