Sovereign Gold Bond scheme opens for subscription

The new series for the Sovereign Gold Bond [SGB] scheme opened today onwards. The Central bank has fixed the price at Rs6,199 per gram. The public issue of SGB Scheme 2023-2024 Series III will close on Friday, December 22.

Sovereign Gold Bond scheme opens for subscription

The release is prompted by the noteworthy surge in gold prices, surpassing a 10 percent increase in 2023, and defying expectations despite a challenging high interest rate environment. The price for this issue will be announced by the Reserve Bank of India soon. The valuation of these bonds is established by calculating the straightforward average of the closing price of gold with 999 purity, as per India Bullion and Jewellers Assosciation. This average is calculated using the closing prices of gold for the three working days prior to the start of the subscription period.

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Sovereign Gold Bonds [SGB's] are government securities denominated in grams of gold , providing a viable alternative to owning physical gold. Investors are required to pay the issue price in cash and receive a cash redemption upon maturity.

It is issued by the RBI on behalf of the Government of India, these bonds offer investor protection by ensuring they receive the prevailing market price of gold upon redemption. This feature guarantees the value of the initially invested quantity of gold, making SGB's a more favourable option compared to holding physical gold.

It typically offers a fixed interest rate of 2.50 percent per annum on the initial investment amount. The minimum investment in SGBs is 1 gram, and these bonds are issued in denominations of one gram or multiples thereof. 

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For individual investors, the maximum subscription limit is 4 kg per fiscal year[ April-March]. However, trusts and similar entities, as notified by the government, have a higher maximum limit of 20 kg per fiscal year.

WHO CAN INVEST IN SGBs:

Individuals categorized as residents in India under the Foreign Exchange Management Act, 1999, such as individuals , Hindu Undivided Families, trusts, universities, and charitable institutions , are eligible to invest in Sovereign Gold Bonds. For individual investors who undergoes a change from residential status to non residential , they are permitted to retain the SGB until its early redemptions or maturity.

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