Saturday, January 16, 2016

Sovereign Gold Bonds, 2015-16

Government of India has announced that the Sovereign Gold Bonds, 2016 will be open for subscription from 18/1/2016 to 22/1/2016. The scheme may be closed anytime, with prior notice, 22/1/16. The terms and conditions shall be as follows:

Eligibility for Investment:
The Bonds may be held by a person resident in India in his individual capacity, on behalf of minor child, or jointly with any other individual. It may also be held by a Trust, Charitable Institution and University.

Form of Security
The Bonds shall be issued in the form of Government of India Stock. The investors will be issued a Holding Certificate and it shall be eligible for conversion into de-mat form.

Date of Issue
Date of issuance shall be February 08, 2016.

The Bonds shall be denominated in units of one gram of gold and multiples thereof. Minimum investment shall be two grams and maximum five hundred grams per person per fiscal year.

Issue Price
Price of the Bonds shall be fixed in Indian Rupees on the basis of the previous week’s (Monday – Friday) simple average closing price for gold of 999 purity, published by IBJA.

The Bonds shall bear interest at the rate of 2.75 percent (fixed rate) per annum. Interest shall be paid in half-yearly rests and the last interest shall be payable on maturity along with the principal.

Receiving Offices
Scheduled commercial banks (excluding RRBs), designated Post Offices and Stock Holding Corporation of India Ltd (SHCIL) are authorized to receive applications.

Payment Options
Payment shall be accepted in Indian Rupees through Cash upto a maximum of Rs.20,000/- or Demand Drafts or Cheque or Electronic banking.

i)  The Bonds shall be repayable after 8 years from Feb 8, 2016. Pre-mature redemption is permitted from 5th year on the interest payment dates.

ii)    The redemption price shall be fixed in Indian Rupees on the basis of the previous week’s (Monday – Friday) simple average closing price for gold of 999 purity, published by IBJA.

The receiving office shall inform the investor of the date of maturity of the Bond one month before its maturity.

Eligibility for Statutory Liquidity Ratio (SLR)
The investment in the Bonds shall be eligible for SLR.

Loan against Bonds
The Bonds may be used as collateral for loans. The Loan to Value ratio will be as applicable to ordinary gold loan mandated by the RBI. The lien on the Bonds shall be marked in the depository by the authorized banks.

Interest on the Bonds shall be taxable. Capital gains tax treatment will be the same as that for physical gold.

Subscription for the Bonds may be made in the prescribed application form or in any other form stating clearly the grams of gold and the full name and address of the applicant. The receiving office shall issue an acknowledgment receipt to the applicant.

Nomination and its cancellation shall be made as per norms.

The Bonds shall be transferable by execution of an Instrument of transfer.

Tradability of bonds
The Bonds shall be eligible for trading from such date as may be notified by the Reserve Bank of India.

Commission for distribution
Commission shall be at the rate of rupee one per hundred. Receiving offices shall share at least 50% of the commission with the agents or sub-agents for the business procured through them.

Based on RBI Circular dt 14/01/16. Please visit for any further clarification if required…..       Poppy