The Reserve Bank of India has announced the Sovereign Gold Bond Scheme 2021-2022, Series 6, that will be open for subscription for five days from August 30 to September 3, 2021. The issue price for the next tranche of Sovereign Gold Bond Scheme 2021-22, has been fixed at Rs 4,732 per gram of gold. “The nominal value of the bond…works out to Rs 4,732 per gram of gold,” the central bank said on Friday. The government, in consultation with the Reserve Bank of India (RBI), also provides a discount of Rs 50 per gram less than the nominal value to those investors applying online and where the payment against the application is made through digital mode.
“For such investors, the issue price of Gold Bond will be Rs 4,682 per gram of gold,” the RBI said. With an intention to reduce the demand for physical gold and shift domestic savings used for buying gold metal, the Sovereign Gold Bond Scheme was launched in November in 2015. The price of gold bond is decided on the basis of simple average of closing price of gold of 999 purity, published by the Indian Bullion and Jewellers Association Limited for the last three working days of the week preceding the subscription period.
Earlier, the government had announced issuance of the Sovereign Gold Bond (SGB) in six tranches from May 2021 to September 2021. The RBI issues the bonds on behalf of the Government of India.
Who all can invest in these Bonds?
Any individual who is the resident in India, Hindu undivided families, trusts, universities and charitable institutions are eligible to invest in the sovereign gold bond scheme. A minor is also eligible to invest in the Sovereign gold bond scheme provide the application is put up by the guardian on his behalf. These bonds are denominated in multiples of gram (s) of gold with a basic unit of 1 gram. The tenor of the bond is for a period of 8 years with exit option after 5th year to be exercised on the next interest payment dates. Minimum permissible investment is 1 gram of gold. The maximum limit of subscription is 4 kg for individuals, 4 kg for HUFs and 20 kg for trusts and similar entities per fiscal (April-March).
Can I apply online?
Yes. If you are keen to buy this bond, you can apply online through the website of the listed scheduled commercial banks. 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.
Can you go for encashment and premature redemption?
The option of early encashment can be availed by the investors after the fifth year from the date of issue. If someone bought the bonds in 2015, the option of encashment is available from 2020 onwards. Another incentive of buying this bond is its transferability. If someone is willing to exit investment even before 5 years, then he or she can get in touch with the bank. In case of premature redemption, investors can approach the concerned bank/SHCIL offices/Post Office/agent thirty days before the coupon payment date. However, the important point here is to be noted is that a request for premature redemption can only be entertained if the investor approaches the concerned bank/post office at least one day before the coupon payment date.
Can you use this bonds as collateral?
There is one big benefit of buying these bonds that these bonds qualifies to be used as collateral to avail a loan from banks, NBFCs and other financial institutions, however the Loan to Value ratio would be similar as that of gold loans at the moment. The know-your-customer (KYC) norms are the same as that for purchase of physical gold.
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