India’s central bank, the RBI or Reserve Bank of India is all prepped to introduce Series II of the Sovereign Gold Bond Scheme of 2023-2024. The main subscription for these bonds will begin on 11 September 2023, remaining open until 15 September 2023. The price of the bonds in INR will be determined according to the average price of the 999-gold purity standard corresponding to the price existing three working days prior to the bond issuance and that which is published by the India Bullion and Jewellers Association Limited.
In case you are an investor who wishes to apply for these bonds online and make a digital payment to secure your investment, you can avail of a ₹ 50 discount on the price of the issue. Before you consider investment in SGB Series II of 2023-2024, you may want to find out details of the investment. You will find relevant information as you read on.
In Short: What Are SGBs?
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Sovereign Gold Bonds – Basics
Before you venture to invest in Sovereign Gold Bonds, or SGBs as they are commonly called, you may want to find out what they are. Essentially, SGBs are a kind of government security issued by the Reserve Bank of India. SGBs are issued in units of 1 gram of gold and are typically linked to the gold price in the market.
The Reserve Bank of India issues SGBs in many tranches on an annual basis. Consequently, Series I was issued in June, with Series II being released in September. The objective of the ₹ 50 (per 1 gram) discounts for online transactions is to encourage online investment in SGBs.
The advantage you get by investing in SGBs is the fact that they let you invest in gold without the challenges that physical gold presents. They can be securely held in a Demat account without any threat of theft, loss, or misuse. They come in denominations of grams, 1 gram being the smallest unit. Besides the fact that they offer you more security in terms of holding, they also offer transparency in pricing relative to physical gold as they do not present any doubt in purity or value.
Purchasing Sovereign Gold Bonds Series II of 2023-2024
Sovereign Gold Bonds Series II of 2023-2024 can be easily subscribed from the Bajaj Financial Securities trading platform in a swift and convenient manner. It can also be bought from certain Scheduled Commercial Banks, SHCIL or the Stock Holding Corporation of India Limited, CCIL or the Clearing Corporation of India Limited, and specific stock exchanges such as the Bombay Stock Exchange (BSE) or the National Stock Exchange (NSE). They cannot be bought from Small Finance Banks or Rural Regional Banks.
Important Dates
The date of issue of the SGB Series II 2023-2024 will open for investors to subscribe to from 11 September 2023 to 15 September 2023. The price of the issue can be determined by calculating the previous three days’ average closing price of the 999 standards of purity of gold as fixed by the Indian Bullion and Jewellers Association. Investors can expect the SGBs to be allotted to them on 20 September 2023. Furthermore, it is important to note that besides potential capital gains, SGBs offer predetermined interest rates of 2.5% annually, paid to investors on a bi-annual basis.
Eligibility for Investment
The following are the criteria for investing in SGBs:
- Indian residents defined as per FEMA 1999
- HUFs, trusts, universities, charitable organisations, and individuals
Limits for Subscription
According to the kind of investor, the maximum limits for subscription vary as highlighted below:
- Upto 4 Kg may be invested by individuals
- Upto 4 Kg may be invested by a HUF
- 20 Kg may be invested by charitable institutions and trusts in a fiscal year (April to March)
- If holders apply on a joint basis, the limit of 4 Kg is applicable to the first holder only
Investment Advantages
SGBs are a potentially good alternative to investing in physical gold and offer you the perks of interest and potential capital appreciation. As bonds are linked with the prices of pure gold in the market, they may potentially give positive returns. Furthermore, in case bonds are held until maturity (8 years), you get to avail the benefits of tax exemption.
