Sovereign Gold Bond Scheme 2018-19-Series I
Eligibility for Investment
The Bonds under this Scheme may be held by a person resident in India, being an individual, in his capacity as such individual, or on behalf of minor child, or jointly with any other individual. The bond may also be held by a Trust, HUFs, Charitable Institution and University. “Person resident in India” is defined under section 2(v) read with section 2(u) of the Foreign Exchange Management Act, 1999.
Form of Security
The Bonds shall be issued in the form of Government of India Stock in accordance with section 3 of the Government Securities Act, 2006. The investors will be issued a Holding Certificate Form C (126 KB). The Bonds shall be eligible for conversion into de-mat form.
Date of Issue
Date of issuance shall be May 04, 2018
The Bonds shall be denominated in units of one gram of gold and multiples thereof. Minimum investment in the Bonds shall be one gram with a maximum limit of subscription of 4 kg for individuals, 4 kg for Hindu Undivided Family (HUF) and 20 kg for trusts and similar entities notified by the government from time to time per fiscal year (April – March). A self-declaration to this effect will be obtained, provided that
- in case of joint holding, the investment limit of subscription of 4 Kgs shall be applicable to the first applicant only;
- annual ceiling will include bonds subscribed under different tranches during initial issuance by Government and those purchased from the secondary market;
- the ceiling on investment will not include the holdings as collateral by banks and other Financial Institutions.
Issue Price *
The nominal value of the bond based on the simple average closing price [published by the India Bullion and Jewellers Association Ltd (IBJA)] for gold of 999 purity of the last three business days of the week preceding the subscription period, i.e. April 11-13, 2018 works out to Rs 3,114/- (Rupees Three Thousand One Hundred Fourteen only) per gram.
However, the Government of India, in consultation with the Reserve Bank of India, has decided to offer a discount of Rs 50 per gram less than the nominal value to those investors applying online and the payment against the application is made through digital mode (presently for retail customers only through Baroda Connect). For such investors, the issue price of Gold Bond will be Rs 3064/- (Rupees Three Thousand Sixty Four only) per gram of gold.
Tenure of the Bond
The tenor of the Bond will be for a period of 8 years with exit option in 5th, 6th and 7th year, to be exercised on the interest payment dates.
The Bonds shall bear interest from the date of issue at the rate of 2.50 percent (fixed rate) per annum on the nominal value. Interest shall be paid in half-yearly rests and the last interest shall be payable on maturity along with the principal.
Applicants will be paid interest at prevailing savings bank rate from the date of realization of payment to the settlement date, ie. the period for which they are out of funds. In case the applicant’s bank account is not with the receiving bank, the interest has to be credited by electronic fund transfer to the account details provided by the applicant.
Scheduled Commercial Banks (excluding RRBs), designated Post Offices (as may be notified), Stock Holding Corporation of India Ltd (SHCIL) and recognized stock exchanges viz., National Stock Exchange of India Limited and Bombay Stock Exchange Ltd. are authorized to receive applications for the Bonds either directly or through agents.
Payment shall be accepted in Indian Rupees through cash* up to a maximum of Rs. 20,000/- or Demand Drafts* or Transfer Cheque or Electronic banking*. Where payment is made through cheque or demand draft, the same shall be drawn in favour of Branch.
- The Bonds shall be repayable on the expiration of eight years from May 04, 2018, the date of issue of Bonds. Pre-mature redemption of the Bond is permitted from fifth year of the date of issue on the interest payment dates.
- The redemption price shall be fixed in Indian Rupees and the redemption price shall be based on simple average of closing price of gold of 999 purity of the previous 3 working days, published by the India Bullion and Jewelers Association Limited.
RBI/depository shall inform the investor of the date of maturity of the Bond one month before its maturity
Eligibility for Statutory Liquidity Ratio (SLR)
Bonds acquired by the banks through the process of invoking lien/hypothecation/pledge alone shall be counted towards Statutory Liquidity Ratio.
Loan against Bonds (Collateral)
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 from time to time. The lien on the Bonds shall be marked in the depository by the authorized banks. The loan against SGBs would be subject to decision of the bank/financing agency, and cannot be inferred as a matter of right.
Interest on the Bonds shall be taxable as per the provisions of the Income-tax Act, 1961. The capital gains tax arising on redemption of SGB to an individual has been exempted. The indexation benefits will be provided to long term capital gains arising to any person on transfer of bond
Subscription for the Bonds may be made in the prescribed application form (From 'A') or in any other form as near as thereto stating clearly the grams of gold and the full name and address of the applicant. The receiving office shall issue an acknowledgment receipt in Form B (14 KB) to the applicant.
Application forms from investors will be received at branches during normal banking hours from April 16, 2018 to April 20, 2018. The Branches need to ensure that the application is complete in all respects as incomplete applications are liable to be rejected. Relevant additional details may be obtained from the applicants, where necessary.
Joint holding and Nomination
Nomination and its cancellation shall be made in Form D and Form E (60.4 KB), respectively, in accordance with the provisions of the Government Securities Act, 2006 (38 of 2006) and the Government Securities Regulations, 2007, published in part III, Section 4 of the Gazette of India dated December 1, 2007.
Multiple joint holders and nominees (of first holder) are permitted. Necessary details may be obtained from the applicants as per practice. An individual Non - resident Indian may get the security transferred in his name on account of his being a nominee of a deceased investor provided that:
- the Non-Resident investor shall need to hold the security till early redemption or till maturity; and
- the interest and maturity proceeds of the investment shall not be repatriable.
The Bonds shall be transferable by execution of an Instrument of transfer as in Form F (20.4 KB), in accordance with the provisions of the Government Securities Act, 2006 (38 of 2006) and the Government Securities Regulations, 2007, published in part III, Section 4 of the Gazette of India dated December 1, 2007
Tradability of bonds
The Bonds shall be eligible for trading on Stock Exchanges within a fortnight of the issuance on a date as may be notified by the Reserve Bank of India. (It may be noted that only bonds held in demat form with depositories can be traded in stock exchanges)
Know-Your-Customer (KYC) requirements
Know-Your-Customer (KYC) norms shall be the same as that for purchase of physical form of gold. Identification documents such as passport, Permanent Account Number (PAN) Card, Voter's Identity Card, Aadhaar card shall be required. In case of minors only, the bank account number may also be considered as valid for KYC verification. KYC will be done by the banks/SHCIL offices/Post Offices/designated stock exchanges/agents. It may be ascertained from the investor, if he/she has made a previous investment in SGBs or IINSC-C and hence in possession of an Investor ID. If so, the investments may be made under the unique Investor ID only.
Cancellation of application is permitted till the closure of the issue, i.e. April 20, 2018. Part cancellation of submitted request for purchase of gold bonds is not permitted. No interest on application money needs to be paid if the application is cancelled.
As the bonds are government securities, lien marking, etc. will be as per the extant legal provisions of Government Securities Act, 2006 and rules framed there under.
Agency Arrangement and Commission for distribution
Receiving Offices may engage NBFCs, NSC agents and others to collect application forms on their behalf. Banks may enter into arrangements or tie-ups with such entities. Commission for distribution shall be paid at the rate of Rupee one per hundred of the total subscription received by the receiving offices on the applications received and receiving offices shall share at least 50% of the commission so received with the agents or sub-agents for the business procured through them.
Processing through RBI’s e-Kuber system
Sovereign Gold Bonds will be available for subscription at the branches of scheduled commercial banks and designated post offices through RBI’s e- Kuber system. The e-Kuber system can be accessed either through INFINET or Internet. Our Link Cell, Nagpur will enter the data or carry out bulk upload for the subscriptions received by them. Link Cell, Nagpur will ensure accuracy of entry of data to prevent occurrence of any inadvertent errors. An immediate confirmation will be provided to them for receipt of application. In addition, a confirmation scroll will be provided for file uploads to enable the Link Cell, Nagpur to update their database. On the date of allotment, Certificates of Holding will be generated for all the subscriptions in the name of the sole/principal holder. The Link Cell, Nagpur can download the same and take printouts. The Certificates of Holding will also be sent through e-mail to the investors who have provided their email address. The securities will be credited in their de-mat accounts by the depositories, in due course, subject to matching of particulars furnished in the application with the depositories’ records.
Printing Certificates of Holding
Holding Certificate needs to be printed in colour on A4 size 100 GSM paper.
Servicing and follow up
The Branch will “own” the customer and provide necessary services with regards to this bond e.g. update contact details, receive requests for premature encashment, etc. The Branch will be required to preserve applications till the bonds are matured and are repaid.
All Branches in India are authorized to issue Bonds.
*- Price of Bond will be fixed in Indian Rupees on the basis of simple average of closing price of gold of 999 purity published by the India Bullion and Jewellers Association Limited for the last 3 business days of the week preceding the subscription period.