A brief overview of the Sovereign Gold Bond (SGB) Scheme 2023-24 based on the December 11, 2023 notification by the Reserve Bank of India (RBI)

Posted On - 5 January, 2024 • By - King Stubb & Kasiva

About the Notification:[1]

The Sovereign Gold Bond (SGB) Scheme 2023-24, Series III has been launched by the Reserve Bank of India (RBI). Subscriptions for the scheme were accepted from December 18 to December 22, 2023, with a settlement date of December 28, 2023. SGBs were issued at a price of Rs 6,199 per gram, with an additional discount of Rs 50 per gram for online subscribers. The India Bullion and Jewellers Association (IBJA) states that the value of these bonds is calculated by taking the simple average of the closing price of 999. The eight-year maturity length of these government-backed securities gives investors the option to withdraw from the programme at any time beginning with the fifth year of interest payments. Additionally, they provide a 2.50% annual interest rate that is paid semi-annually on the investment’s nominal value.

Furthermore, within two weeks of issue, the SGBs can be traded on stock markets, giving investors the chance to invest in gold without requiring physical storage. The prescribed application form, Form A, or any other form that clearly states the units (in grammes) of gold as well as the applicant’s full name and address, may be used to subscribe for the bonds. Every application must be accompanied by valid ‘PAN details’ issued by the income tax department to Designated scheduled commercial banks, designated post offices, Stock Holding Corporation of India Ltd., Clearing Corporation of India Ltd. and the recognised stock exchanges.

For individuals who are interested in investing in gold, the scheme offers a government-backed option that comes with stable interest rates and the possibility of capital growth based on gold prices.[2]

  • Announcement of Series III and IV:
    • The Sovereign Gold Bond Scheme 2023–24’s III and IV have been introduced by the Government of India through Notification No. F.No.4(6)-B (W&M)/2023, dated December 08, 2023.
    • the bond that is given to the investor will identify these two separate series (Series III and IV).[3]
  • Dates of Issue:
    • Series III: From December 18 to December 22, 2023, investors may subscribe to this tranche. Series III will be issued on Thursday, December 28, 2023.
    • Series IV: Subscriptions for the second tranche will be accepted from February 12 to February 16, 2024. Series IV will be issued on Wednesday, February 21, 2024.
  • Subscription Period:
    • The subscription for the Gold Bonds under the Scheme will be open from Monday to Friday on the specified dates.
    • The Central Government retains the power to terminate the Scheme before the specified period with reasonable prior notice.
  • Application Process:
    • Using Form, A, the required application form, or any other form that substantially resembles it, investors may apply for the Bonds.
    • The application must include the applicant’s complete name and address, as well as the units of gold (in grammes).
    • Valid PAN details issued by the Income Tax Department are mandatory for all applicants.
    • Designated Scheduled Commercial Banks, Designated Post Offices, Stock Holding Corporation of India Ltd., and recognised stock exchanges (National Stock Exchange of India Ltd. and Bombay Stock Exchange Ltd.) are among the receiving offices that are permitted to take applications.
  • Online Applications:
    • All online applications need to upload the investor(s)’ email address along with their subscription details to the Reserve Bank of India’s Ekuber portal.
  • Service and Guidelines:
    • Receiving Offices are responsible for providing services to SGB investors.
    • Detailed procedural guidelines for servicing these bonds are available in the Consolidated Procedural Guidelines issued by the RBI.[4]

The Key Elements of SGBs in Series III:

Gold for Everyone: Invest as little as 1 gram to own gold. Due to its 1-gram weight per bond, it is affordable for a range of budgets.

Cost in relation to gold: The bond’s price fluctuates every week to reflect the real market value of gold. Don’t worry about spending too much.

Guaranteed Returns: Receive regular payments of 2.5% interest to your bank account twice a year.

Invest for the Long Term: Hold your gold for 8 years, but if you need cash earlier, you can redeem part of your investment after 5 years.

Limits Apply: Individuals can buy up to 4 kg of gold bonds per year, while trusts and certain institutions have a higher limit of 20 kg.

Eligibility Criteria: Individuals, including Hindu Undivided Families, trusts, and certain organizations, can invest in SGB[5].

[1] https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=12569

[2] https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=55856

[3] https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=12569&Mode=0

[4] https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=12569&Mode=0

[5] https://goldenpi.com/blog/investment-guide/investors-guide-to-the-sovereign-gold-bond-scheme-2023-24-series-iii/