Sovereign Gold Bond Scheme 2016

(Open between 1st Sept to 9th Sept 2016)

It is a government securities denominated in grams of gold. They are substitutes for holding physical gold. Investors have to pay the issue price in cash and the bonds will be redeemed in cash on maturity. The Bond is issued by Reserve Bank on behalf of Government of India. The bonds are held in the books of the RBI  or in demat form eliminating risk of loss of scrip. The application form will be provided by the issuing banks/designated Post Offices. It can also be downloaded from the RBI’s website. Banks may also provide online application facility.

Process

KYC will be completed by the issuing banks/Post Offices. Any Individual, HUF, Trust and Company can subscribe to these bonds. The maximum holding period is 8 years with lock in period of 5 years. It carries interest rate of  2.75% pa. On maturity one can get the equivalent amount of market price of gold. Loan Facility is available against gold Bonds. One can possess gold on paper and need not  take risks of physical safekeeping.

 

Important points to note while Buying SGB:

  1. Issue Period: Issue open date : 1st Sept 2016 Issue Close date – 9th Sept 2016
  2. Price : Rs 3150 Per gram of Gold
  3. Interest : 2.75% p.a. payable semi-annually on the initial value of investment
  4. Investment : Min - 1Grm Max – 500 Grms gold per person in a Fiscal year (April – March)
  5. Tenor : 8years with Exit option from 5th year to be exercised on interest payment dates
  6. Tradability :  Tradable on exchanges from date to be notified by RBI

Why Sovereign Gold Bonds is better than buying physical Gold or even investing in Gold ETFs?

Parameters

Physical Gold

Gold ETFs

Sovereign Gold Bonds

Returns

Lower than Actual Returns on Gold

Lower than Actual Returns on Gold

Higher than Actual Returns on Gold

Safety

Risky of Handling

High

High

Purity

Remains a Question

High- Electronic Form

Highest Purity

Collateral for Loan

Yes

No

Yes

Tradability

Conditional

Tradable on Exchange

Tradable on Exchange Exit- 5 th yr onwards

Storage Cost

High

Very low

Very low

Last modified on Saturday, 11 March 2017 06:04

Prakash Praharaj

Shri Prakash Praharaj has a passion for excellence. He has been awarded two gold medals for securing top positions both in Graduation and Post Graduation in Commerce. He is an MBA with specialization in Finance and marketing. He has been awarded Diploma in Treasury, Investment and Risk Management besides CAIIB from the Indian Institute of Bankers. He is a Certified Financial Planner from the Financial Planning standards Board, India (FPSB), affiliated to FPSB, Denver, USA and Certified Personal Financial Adviser from NISM. He is also a SEBI registered Investment Adviser vide Reg. no. INA 000000045 dated 2nd August 2013.His book "Your Every day guide to Personal Finance and Insurance" has been published by CNBC TV 18 in August 2015.

6 comments

  • Siba Prasad Tripathy

    posted by Siba Prasad Tripathy

    Thursday, 22 September 2016 10:59

    Good article!

    Report
  • Kartik Jaiswal

    posted by Kartik Jaiswal

    Saturday, 10 September 2016 07:35

    excellent option of saving in gold instead of buying a real gold n helpful points..tnx to share

    Report
  • Subhra Kiddy

    posted by Subhra Kiddy

    Saturday, 10 September 2016 07:30

    Good option for investment..... Thanks for the info.

    Report
  • Subhra Kiddy

    posted by Subhra Kiddy

    Saturday, 10 September 2016 07:30

    Good option for invesment..... Thanks for the info.

    Report
  • Ramkrishna Padhi

    posted by Ramkrishna Padhi

    Wednesday, 07 September 2016 05:31

    helpful points..tnx to share

    Report
  • Shruti Mhalgi

    posted by Shruti Mhalgi

    Wednesday, 07 September 2016 05:27

    Good alternative of Investment

    Report

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