Indians have always loved gold. And the surge of mass buying during the festive season is something we have all experienced. So, what does this launch have to offer?
The sovereign gold bond offers its clients the substitute to owning gold in its physical form, therefore eliminating the risk of storage.
The government will be introducing SGB (Sovereign Gold Bond) scheme in the fiscal year 2017-18 and these bonds will be sold via banks, the Stock Holding Corporations of India Limited (SHCIL), a few designated post offices as well as the authorized stock exchanges, particularly, the NSE and BSE. All this information was relayed through a statement by the ministry of finance.
Market value of gold
In accordance with the State Bank of India, all the clients investing in this bond scheme will be guaranteed the market value of gold at both, the time of maturity as well as the periodical interest with the scheme.
Another advantage to this scheme, the SGB is liberated to the concerns such as making charges as well as purity of gold (in the case of jewelry form).
To remove the jeopardy of loss of scrip, these bonds are held in the books of the Reserve Bank of India or in DEMAT form.
In order for you to register for this scheme, an application form needs to be filled out. This is available and provided by those issuing the bonds, that it, the post offices and banks etc. for easier access, it can also be downloaded from the RBI’s website.
Limits of investment
The limits of investment are as follows: these bonds are issued in quantities of 1gram of gold and further multiples. Bare minimum investment in the Bond shall be one gram with a greatest buying limit of 500 grams per person per fiscal year (April – March). In case of joint holding, the limit applies to the first candidate.
All those who have invested in this scheme will be paid the interest at the rate that is authorized and notified by the RBI at the time of the launch. This interest will be attributed semi-annually to the investor’s bank account and the concluding interest will be payable along with the principal at the time of maturity.
The price of the bond will, of course, be fixed in Indian Rupees. This price will be based on the previous week’s average closing gold price published by the IBJA (Indian Bullion and Jewelers Association).
Exiting from the bonds
If there is a case of exiting from the bonds before the allotted time, then the investors can go to the designated post office or bank before the coupon payment date. The remaining proceeds will then be credited to the bank account of the investor.
Another added advantage, these bonds can be used as securities for collateral as loans. This can be applied to banks, financial institutions as well as Non-Banking Financial Companies.
So if you are looking for an investment option that is secure and government approved, investing in this scheme is a step in the right direction.