Monday, March 7, 2016

Sovereign Gold Bonds- 2016 Series-II

Government of India has announced that the Sovereign Gold Bonds, 2016 will be open for subscription from March 8, 2016 to March 14, 2016. It may close the Scheme before the specified period without prior notice.

1.       Eligibility for Investment:
The Bonds under this Scheme may be held by a resident Indian in his individual capacity or jointly with any other individual. It may also be held by a Trust, Charitable Institution and University.

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

3.       Date of Issue
Date of issuance shall be March 29, 2016.

4.       Denomination
In multiples of one gram of gold. Minimum investment shall be 2 grams with a maximum limit of 500 grams per person per fiscal year.

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

6.       Interest
2.75% per annum on the initial investment. Interest shall be paid in half-yearly rests and the last interest shall be payable on maturity along with the principal.

7. Receiving Offices
Scheduled commercial banks (excluding RRBs), designated Post Offices and Stock Holding Corporation of India Ltd (SHCIL), either directly or through agents.

8. Payment Options
Indian Rupees through Cash up to Rs.20,000/- or Demand Drafts or Cheque or Electronic banking in favour of receiving office.

9. Redemption
i)                On the expiration of eight years from February 8, 2016. Pre-mature redemption is permitted from fifth year on the interest payment dates.

ii)           The redemption price shall be fixed in INR on the basis of the previous week’s average closing price for gold of 999 purity, published by IBJA.

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

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

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

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

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

15. Nomination
Nomination and its cancellation is allowed to be made.

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

17. Tradability of bonds
The Bonds shall be eligible for trading.

18.  Commission for distribution
Commission for distribution shall be paid at Rs1/- per Rs.100/- of the total subscription received and receiving offices shall share at least 50% of it with the agents or sub-agents.

Based on RBI Circular dt 04/03/16. Please visit for any further clarification if required….. Poppy