Sovereign Gold Bond
Sovereign Gold Bond, abbreviated as SGB, is a government security issued by the Reserve Bank of India (RBI) on behalf of the Government of India. It is denominated in grams of gold and is linked to the price of gold in India. It is also an interest-bearing bonds, carrying an interest of 2.5% p.a. paid in two installments in a year.[1][2]
The bond has an 8-year term with an option for early withdrawal through the RBI after 5 years. It's listed and traded on Indian stock exchanges, allowing eligible investors to buy or sell anytime through their dematerialization accounts. It can also be transferred to another eligible investor without redemption through the RBI.[3]
History
The scheme was introduced due to a forex crisis caused by high gold imports.[4] It was first notified by the Department of Economic Affairs on 14 January 2016 under the Government Securities Act, 2006. The initial subscription required a minimum of 2 grams and a maximum of 500 grams. It was open from January 18 to January 22, 2016. The bonds initially paid 2.75% interest per year, later reduced to 2.5% per year.[5][2] The bonds were sold through banks, post offices and through online securities brokers which would allow investors to hold the bonds in demat form.[6][7]
In August 2024, the investors who would have redeemed the bonds issued in August 2016 lost suffered a loss due a fall in the price of gold. This fall was linked to the slash in import duty on gold from 15% to 6% during the 2024 Union budget of India.[8]
After the final redemption of the 2016-I series, it was rumoured that the scheme was turning out to be very expensive for the Indian government, due to an unexpected rise in the prices of gold. The government also felt SGBs have also not served the purpose for which it was launched, which was to bring down gold imports by trying to move demand from physical gold to an electronic form. In addition, the RBI did not issue any new series after February 2024.[9][10]
Eligibility
People residing in India, as defined in he Foreign Exchange Management Act, 1999 are eligible to invest in SGBs. These include individuals, Hindu Undivided Families (HUFs), universities, trusts, and charitable institutions. People who become non-residents after buying an SGB can still hold it until maturity or premature redemption.[3]
The bonds are issued in 1-gram denominations and multiples thereof. Each eligible investor can purchase up to 4 kg per financial year. A demat account is optional; bonds can be held in dematerialized form with a securities depository or tracked by the RBI.[3]
Price
The issue price is the average closing price of 999 purity gold from the last 3 business days before the subscription period, as published by the India Bullion and Jewelers Association Limited (IBJA). The redemption price, for both early and maturity redemptions, is the average closing price from the 3 business days before repayment.[11]
Comparison with other forms of gold investments
SGBs, purely as an investment format, can be compared to other forms of investing in Gold.[12]
| SGB | Physical gold | Gold ETF and mutual funds | Digital gold | |
|---|---|---|---|---|
| Storage | Stored in government facilities. Very low risk of theft. | Risk of theft | Stored in vaults. Low risk of theft[13] | Stored in vaults. Low risk of theft[14] |
| Regulated by | RBI, and by extension, Government of India | Not regulated | SEBI, and by extension, Government of India | Not regulated |
| Charges | No making charges, GST, or expense ratio | Making charges from 8% to 35%. GST of 3%. No expense ratio. | No making charges or GST. Expense ratio up to 1% is allowed. | No making charges. GST of 3% and commissions are applicable. No expense ratio |
| Interest | Fixed at 2.5% per annum | No interest payments | No interest payments | No interest payments |
| Taxation | No tax on capital gains. Interest is taxed at slab.[15][16] | Tax on capital gains | Tax on capital gains | Tax on capital gains |
| Liqudity | Can be sold on stock exchanges if held in demat form. Can be sold back to the RBI at specified intervals. | Can be sold physically to jewelers. | Units can be sold back to the asset management company | Can be liquidated instantly. |
Issue history
| S No | Tranche | ISIN | Issue Date | Issue price/unit (₹) | Units subscribed (grams) | Redemption price/unit (₹) | CAGR Returns (Absolute) (%) |
|---|---|---|---|---|---|---|---|
| 1 | 2015-I | IN0020150085 | November 30, 2015 | 2684 | 913571 | 6132[18][19] | 10.87 (128.46) |
| 2 | 2016-I | IN0020150101 | February 8, 2016 | 2600 | 2869973 | 6271[20][21] | 11.63 (141.19) |
| 3 | 2016-II | IN0020150119 | March 29, 2016 | 2916 | 1119741 | 6601[22][23] | 10.75 (126.37) |
| 4 | 2016-17 Series I | IN0020160027 | August 5, 2016 | 3119 | 2953025 | 6938[24][25] | 10.50 (122.44) |
| 5 | 2016-17 Series II | IN0020160043 | September 30, 2016 | 3150 | 2615800 | ||
| 6 | 2016-17 Series III | IN0020160076 | November 17, 2016 | 3007 | 3598055 | ||
| 7 | 2016-17 Series IV | IN0020160126 | March 17, 2017 | 2943 | 2220885 | ||
| 8 | 2017-18 Series I | IN0020170018 | May 12, 2017 | 2951 | 2027695 | ||
| 9 | 2017-18 Series II | IN0020170034 | July 28, 2017 | 2830 | 2349953 | ||
| 10 | 2017-18 Series III | IN0020170059 | October 16, 2017 | 2956 | 264815 | ||
| 11 | 2017-18 Series IV | IN0020170067 | October 23, 2017 | 2987 | 378945 | ||
| 12 | 2017-18 Series V | IN0020170075 | October 30, 2017 | 2971 | 174024 | ||
| 13 | 2017-18 Series VI | IN0020170083 | November 6, 2017 | 2945 | 153356 | ||
| 14 | 2017-18 Series VII | IN0020170091 | November 13, 2017 | 2934 | 175121 | ||
| 15 | 2017-18 Series VIII | IN0020170109 | November 20, 2017 | 2961 | 135666 | ||
| 16 | 2017-18 Series IX | IN0020170117 | November 27, 2017 | 2964 | 105512 | ||
| 17 | 2017-18 Series X | IN0020170125 | December 4, 2017 | 2961 | 107380 | ||
| 18 | 2017-18 Series XI | IN0020170133 | December 11, 2017 | 2952 | 81614 | ||
| 19 | 2017-18 Series XII | IN0020170141 | December 18, 2017 | 2890 | 111218 | ||
| 20 | 2017-18 Series XIII | IN0020170158 | December 26, 2017 | 2866 | 131958 | ||
| 21 | 2017-18 Series XIV | IN0020170166 | January 1, 2018 | 2881 | 327434 | ||
| 22 | 2018-19 Series I | IN0020180033 | May 4, 2018 | 3114 | 650337 | ||
| 23 | 2018-19 Series II | IN0020180249 | October 23, 2018 | 3146 | 312258 | ||
| 24 | 2018-19 Series III | IN0020180314 | November 13, 2018 | 3183 | 409398 | ||
| 25 | 2018-19 Series IV | IN0020180389 | January 1, 2019 | 3119 | 207886 | ||
| 26 | 2018-19 Series V | IN0020180462 | January 22, 2019 | 3214 | 243606 | ||
| 27 | 2018-19 Series VI | IN0020180561 | February 12, 2019 | 3326 | 207388 | ||
| 28 | 2019-20 Series I | IN0020190073 | June 11, 2019 | 3196 | 459789 | ||
| 29 | 2019-20 Series II | IN0020190081 | July 16, 2019 | 3443 | 535947 | ||
| 30 | 2019-20 Series III | IN0020190107 | August 14, 2019 | 3499 | 1024837 | ||
| 31 | 2019-20 Series IV | IN0020190115 | September 17, 2019 | 3890 | 627892 | ||
| 32 | 2019-20 Series V | IN0020190370 | October 15, 2019 | 3788 | 455776 | ||
| 33 | 2019-20 Series VI | IN0020190388 | October 30, 2019 | 3835 | 693210 | ||
| 34 | 2019-20 Series VII | IN0020190461 | December 10, 2019 | 3795 | 648304 | ||
| 35 | 2019-20 Series VIII | IN0020190537 | January 21, 2020 | 4016 | 522119 | ||
| 36 | 2019-20 Series IX | IN0020190545 | February 11, 2020 | 4070 | 405957 | ||
| 37 | 2019-20 Series X | IN0020190552 | March 11, 2020 | 4260 | 757338 | ||
| 38 | 2020-21, Series I | IN0020200062 | April 28, 2020 | 4639 | 1772874 | ||
| 39 | 2020-21, Series II | IN0020200088 | May 19, 2020 | 4590 | 2544294 | ||
| 40 | 2020-21, Series III | IN0020200104 | June 16, 2020 | 4677 | 2388328 | ||
| 41 | 2020-21, Series IV | IN0020200146 | July 14, 2020 | 4852 | 4130820 | ||
| 42 | 2020-21, Series V | IN0020200161 | August 11, 2020 | 5334 | 6349781 | ||
| 43 | 2020-21, Series VI | IN0020200195 | September 8, 2020 | 5117 | 3190133 | ||
| 44 | 2020-21, Series VII | IN0020200203 | October 20, 2020 | 5051 | 1859518 | ||
| 45 | 2020-21, Series VIII | IN0020200286 | November 18, 2020 | 5177 | 1573457 | ||
| 46 | 2020-21, Series IX | IN0020200377 | January 5, 2021 | 5000 | 2869886 | ||
| 47 | 2020-21, Series X | IN0020200385 | January 19, 2021 | 5104 | 1214048 | ||
| 48 | 2020-21, Series XI | IN0020200393 | February 9, 2021 | 4912 | 1227915 | ||
| 49 | 2020-21, Series XII | IN0020200427 | March 9, 2021 | 4662 | 3230907 | ||
| 50 | 2021-22, Series I | IN0020210053 | May 25, 2021 | 4777 | 5318973 | ||
| 51 | 2021-22, Series II | IN0020210061 | June 1, 2021 | 4842 | 1898475 | ||
| 52 | 2021-22, Series III | IN0020210087 | June 8, 2021 | 4889 | 1479232 | ||
| 53 | 2021-22, Series IV | IN0020210111 | July 20, 2021 | 4807 | 2923762 | ||
| 54 | 2021-22, Series V | IN0020210129 | August 17, 2021 | 4790 | 2292743 | ||
| 55 | 2021-22, Series VI | IN0020210145 | September 7, 2021 | 4732 | 3520341 | ||
| 56 | 2021-22, Series VII | IN0020210178 | November 2, 2021 | 4761 | 3248238 | ||
| 57 | 2021-22, Series VIII | IN0020210228 | December 7, 2021 | 4791 | 2480493 | ||
| 58 | 2021-22, Series IX | IN0020210236 | January 18, 2022 | 4786 | 2333188 | ||
| 59 | 2021-22, Series X | IN0020210319 | March 8, 2022 | 5109 | 1539694 | ||
| 60 | 2022-23, Series I | IN0020220045 | June 28, 2022 | 5091 | 2557864 | ||
| 61 | 2022-23, Series II | IN0020220078 | August 30, 2022 | 5197 | 3360408 | ||
| 62 | 2022-23, Series III | IN0020220110 | December 27, 2022 | 5409 | 2811010 | ||
| 63 | 2022-23, Series IV | IN0020220169 | March 14, 2023 | 5611 | 3531586 | ||
| 64 | 2023-24, Series I | IN0020230069 | June 27, 2023 | 5926 | 7769290 | ||
| 65 | 2023-24, Series II | IN0020230093 | September 20, 2023 | 5923 | 11673960 | ||
| 66 | 2023-24, Series III | IN0020230168 | December 28, 2023 | 6199 | 12106807 | ||
| 67 | 2023-24, Series IV | IN0020230184 | February 21, 2024 | 6263 | 12785729 | ||
| TOTAL | 146961537 |
Note: CAGR calculations are without interest payments and post-tax, since capital gains due to appreciation in price of gold in SGB is tax free.[15]
External links
- Sovereign Gold Bond Scheme FAQs - Reserve Bank of India
- Sovereign Gold Bonds Notifications - Reserve Bank of India
References
- ↑ Rukhaiyar, Ashish (2020-05-17). "Sovereign Gold Bonds, a substitute for physical gold". The Hindu. ISSN 0971-751X. Archived from the original on 27 July 2024. Retrieved 2024-07-26. Unknown parameter
|url-status=ignored (help) - ↑ 2.0 2.1 "What is Sovereign Gold Bonds Interest Rate & How Its Paid?". ICICI Direct. 2022-12-22. Archived from the original on 2023-02-08. Retrieved 2024-04-25. Unknown parameter
|url-status=ignored (help) - ↑ 3.0 3.1 3.2 "Sovereign Gold Bond Scheme". Reserve Bank of India. Archived from the original on 2024-04-09. Retrieved 2024-04-25. Unknown parameter
|url-status=ignored (help) || source-date=2019-02-04 - ↑ Sabnavis, Madan (2023-11-20). "India wants gold, not gold bonds". BusinessLine. Archived from the original on 1 December 2023. Retrieved 2024-07-26. Unknown parameter
|url-status=ignored (help) - ↑ "Notification" (PDF). The Gazette of India. New Delhi. 2015-01-14. pp. 39–40. Archived from the original (PDF) on 2024-04-25. Retrieved 2024-04-25. Unknown parameter
|url-status=ignored (help) - ↑ Bureau, The Hindu (2024-02-11). "Sale of Sovereign Gold Bond through post offices in Tiruchi Division". The Hindu. ISSN 0971-751X. Archived from the original on 26 July 2024. Retrieved 2024-07-26. Unknown parameter
|url-status=ignored (help) - ↑ Bureau, Akhil Nallamuthu & BL Research (2023-12-20). "Sovereign Gold Bond FY24 Series III opens till December 22: Should you invest?". Business Line. Archived from the original on 27 July 2024. Retrieved 2024-07-26. Unknown parameter
|url-status=ignored (help) - ↑ Jain Kaushal, Teena (2024-07-24). "Budget 2024: Sharp dip in gold prices leaves Sovereign Gold Bond investors high and dry". Business Today (India). Archived from the original on 2024-07-24. Retrieved 2024-07-27. Unknown parameter
|url-status=ignored (help) - ↑ Iyengar, Suresh P. (2024-08-15). "SGBs turn costly affair for govt, fail to curb imports". Business Line. Archived from the original on 21 August 2024. Retrieved 2024-09-03. Unknown parameter
|url-status=ignored (help) - ↑ "Why are SGBs giving the government second thoughts?". Finshots. 2024-08-21. Archived from the original on 3 September 2024. Retrieved 2024-09-03. Unknown parameter
|url-status=ignored (help) - ↑ Kulkarni, Sneha (2024-02-15). "New Sovereign Gold Bond tranche: Is SGB Series IV 2023-24 issue price highest ever offered?". The Economic Times. ISSN 0013-0389. Archived from the original on 2024-02-24. Retrieved 2024-04-25. Unknown parameter
|url-status=ignored (help) - ↑ "What are Sovereign Gold Bonds (SGBs)?". Zerodha Support. Archived from the original on 2023-12-08. Retrieved 2024-04-25. Unknown parameter
|url-status=ignored (help) - ↑ Kriplani, Jash (2021-11-09). "Explained: All about how gold ETFs give investors the purest yellow metal". Moneycontrol. Archived from the original on 2021-11-09. Retrieved 2024-04-25. Unknown parameter
|url-status=ignored (help) - ↑ Das, Vipul (2023-04-22). "Digital Gold in Emerging Markets: What are the opportunities and challenges for investors?". Live Mint. Archived from the original on 2023-04-22. Retrieved 2024-04-25. Unknown parameter
|url-status=ignored (help) - ↑ 15.0 15.1 "Sovereign Gold Bond Scheme (SGB)". Union Bank of India. Archived from the original on 2023-10-03. Retrieved 2024-04-25. Unknown parameter
|url-status=ignored (help) - ↑ Das, Basundha (2024-02-11). "Sovereign Gold Bond Series IV FY24: How are SGBs taxed? Details here". Business Today (India). Archived from the original on 2024-02-11. Retrieved 2024-07-20. Unknown parameter
|url-status=ignored (help) - ↑ "Data of Sovereign Gold Bonds (Tranche wise) issued till April 23, 2024". Reserve Bank of India. 2024-04-23. Archived from the original on 2024-04-25. Retrieved 2024-04-26. Unknown parameter
|url-status=ignored (help) - ↑ "Final redemption under Sovereign Gold Bond (SGB) Scheme - Price for final redemption of SGB 2015-I due on November 30, 2023 - RBI". Reserve Bank of India. Archived from the original on 15 May 2024. Retrieved 2024-05-15. Unknown parameter
|url-status=ignored (help) - ↑ Ray, Abeer (2023-11-30). "SGB 2015-I series set for redemption on November 30 with 128% profit on investment; all you need to know". Live Mint. Archived from the original on 2023-11-30. Retrieved 2024-05-15. Unknown parameter
|url-status=ignored (help) - ↑ "Final redemption under Sovereign Gold Bond (SGB) Scheme - Redemption Price for final redemption of SGB 2016-I due on February 08, 2024 - RBI". Reserve Bank of India. Archived from the original on 15 May 2024. Retrieved 2024-05-15. Unknown parameter
|url-status=ignored (help) - ↑ Kaul, Abhinav (2024-02-09). "Sovereign Gold Bond 2016-I matures; gives 13.6% return and outperforms gold funds". Moneycontrol. Archived from the original on 2024-05-10. Retrieved 2024-05-15. Unknown parameter
|url-status=ignored (help) - ↑ "Final redemption under Sovereign Gold Bond (SGB) Scheme - Redemption Price for final redemption of SGB 2016 Series II due on March 28, 2024 (March 29, 2024 being a holiday) - RBI". Reserve Bank of India. Archived from the original on 15 May 2024. Retrieved 2024-05-15. Unknown parameter
|url-status=ignored (help) - ↑ Kulkarni, Sneha (2024-03-27). "Sovereign Gold Bond (SGB): Final redemption price of SGB 2016 Series II announced". The Economic Times. ISSN 0013-0389. Archived from the original on 2024-03-23. Retrieved 2024-05-15. Unknown parameter
|url-status=ignored (help) - ↑ Das, Neelanjit (2024-08-05). "Sovereign Gold Bond 2016-17 Series I final redemption today: Investors to gain 122%; check SGB redemption price". The Economic Times. ISSN 0013-0389. Archived from the original on 6 August 2024. Retrieved 2024-09-03. Unknown parameter
|url-status=ignored (help) - ↑ Prasad, Ajit (2024-08-02). "Final redemption under Sovereign Gold Bond (SGB) Scheme - Redemption Price for final redemption of SGB 2016-17 Series I due on August 5, 2024". Reserve Bank of India. Archived from the original on 3 September 2024. Retrieved 2024-09-03. Unknown parameter
|url-status=ignored (help)
Further reading
- Saranya, S; Antony, Nittymol (16 July 2024). "Influence of Social Media on Investment Decisions of Women with Special Focus on Sovereign Gold Bonds". Artificial Intelligence (AI) and Customer Social Responsibility (CSR). Springer. pp. 603–612. doi:10.1007/978-3-031-50939-1_46. ISBN 978-3-031-50939-1.CS1 maint: Date and year (link) Search this book on
- S. Yadav, Anitha; Shetty, Chetan (16 April 2018). "Gold Monetization Scheme: Issues and Challenges". FIIB Business Review. 5 (4): 8–15. doi:10.1177/2455265820160402.
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