The Reserve Bank of India (RBI) has announced the issue price for the Sovereign Gold Bonds (SGBs) 2023-24 Series III, setting it at ₹6,199 per gram. This move is part of the government’s initiative to provide an alternative to physical gold ownership and encourage savings to flow into financial assets. The subscription window for this series will be open from December 18 to December 22, with the bonds set to be issued on December 28, 2023. Notably, those subscribing through the online mode will enjoy a reduced price of ₹6,149 per gram.
The pricing of Sovereign Gold Bonds is determined in Indian rupees based on the simple average closing price of gold with 999 purity, as published by the India Bullion and Jewellers Association Ltd (IBJA) for the last three working days of the week preceding the subscription period. The nominal value for this series, based on the average closing price between December 13-15, has been calculated at ₹6,199 per gram. For online subscribers, the issue price will be ₹6,149 per gram.
Sovereign Gold Bonds, introduced in November 2015, are government securities denominated in grams of gold, acting as substitutes for physical gold. The scheme aims to mitigate the demand for physical gold and provide investors with a secure and interest-bearing alternative.
Investors are required to pay the issue price in cash, and the bonds will be redeemed in cash upon maturity. The bonds are issued by the Reserve Bank on behalf of the Government of India, and the quantity of gold for which the investor pays is protected. The investor receives the ongoing market price at the time of redemption or premature redemption. One of the key advantages of SGBs is that they eliminate the risks and costs associated with storing physical gold. Additionally, investors are assured of the market value of gold at the time of maturity, along with periodic interest.
The eligibility to invest in SGBs extends to persons resident in India, as defined under the Foreign Exchange Management Act, 1999. This includes individuals, Hindu Undivided Families (HUFs), trusts, universities, and charitable institutions. Joint holding is permitted, and even minors can invest with the application made by their guardian.
The minimum investment in the bond is one gram, with a maximum limit of subscription set at 4 kg for individuals, 4 kg for HUFs, and 20 kg for trusts and similar entities per fiscal year (April – March). Each family member can buy bonds in their own name, with a maximum limit applicable to the first applicant in case of joint holding.
The bonds bear an interest rate of 2.50% per annum on the initial investment amount, credited semi-annually to the investor’s bank account. The last interest payment is made on maturity along with the principal. Investors can apply online through the website of listed scheduled commercial banks, enjoying a reduced issue price of ₹50 per gram when applying online and making payment through digital mode.