Gold rush! Sovereign Gold Bonds open for subscription

12 Feb 2024 , 10:30 AM

The fourth tranche of Sovereign Gold Bonds (SGB) is available for subscription today, February 12, at a cost of ₹6,263 per gram. There is a discount of ₹50 per gram for investors who apply online; the issue price is ₹6,213 per gram after that.

Closing date for the SGB issue is Friday, February 16. The fixed date for the release of SGB is Wednesday, February 21. 
Payment options for the sovereign gold bonds include demand draft, check, internet banking, and cash payments up to a limit of ₹20,000.

The India Bullion and Jewellers Association Ltd. (IBJA) publishes the closing gold price of 999 purity for the preceding three business days, which is the basis for determining the price of SGB. The three business days in this instance are February 7–February 9, 2024.

The Reserve Bank of India (RBI) revealed earlier in December that it would be releasing two new Sovereign Gold Bond Scheme 2023–24 issues: one in December and the other in February. Subscriptions for both of these issues are currently being accepted.

Only residents, HUFs, Trusts, Universities, and Charitable Institutions are permitted to purchase SGBs. The gold bond has a fundamental unit of one gram and is measured in multiples of gram(s) of gold. These bonds will have an eight-year tenor, with the option to redeem them early after the fifth year, exercisable on the date interest is due. 

The government will notify the maximum subscription limit every fiscal year (April-March) of 4 kilograms for persons, 4 kg for HUF, and 20 kg for trusts and similar companies. The lowest allowable investment is one gram of gold. The 4 kg investment cap will only apply to the initial applicant in a joint holding.

In order to decrease the demand for physical gold and redirect some domestic savings that were previously used to buy gold toward financial savings, the sovereign gold bond program was introduced in November 2015.

In a related move, the RBI has designated Monday as the deadline for the early redemption of the sovereign gold bond’s SGB 2018-19 Series VI. Premature redemption costs ₹6,263 per gramme. In the SGB system, early redemption is allowed following the fifth year from the date of issuance. Tranche was issued by RBI on February 12, 2019. 

The SGB redemption price is determined by taking the simple average of the closing 999-purity gold price over the preceding three business days, as reported by India Bullion and Jewellers Association Ltd (IBJA).

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