NEW DELHI: The series-I of the Sovereign Gold Bond (SGB) scheme for 2020-21 will open for subscription on Monday. Prospective bidders can bid for a minimum of 1 gm of gold at Rs 4,639 per gm. Investors who bid online will get a Rs 50 discount on that price.
The issue closes on Friday, April 24. The certificate of bond(s) will be issued on April 28.
You can subscribe to the issue through your bank. Besides, these bonds will also be sold through Stock Holding Corporation of India Limited (SHCIL), designated post offices, NSE and BSE, either directly or through agents.
“SGBs are to be treated more as an asset diversification strategy rather than to earn superior returns. Investors can also consider doing an SIP in every tranche of SGBs, especially those who are either underinvested in gold or have regular fresh monies for allocation among various asset classes or need to accumulate gold for weddings or other auspicious occasions,” said HDFC Securities.
Investors would get a 2.50 per cent interest on the amount of initial investment, which will take effect from the date of its issue and will be payable every six months. Besides, they can also avail capital gains at the time of redemption, in case the gold price at the time of redemption is higher, said analysts.
SGBs are government securities denominated in grams of gold. They are substitutes for physical gold. Investors have to pay the issue price in cash and the bonds will be redeemed in cash on maturity. The bonds are issued by RBI on behalf of the government.
The bond will have a tenure of eight years with exit options in fifth, sixth and seventh year, to be exercised on the interest payment dates. Besides, they will be tradable on stock exchanges within a fortnight of the issuance.
Among the benefits of subscribing to SGB are attractive interest with asset appreciation opportunity, redemption being linked to gold price, elimination of risk and cost of storage, exemption from capital gains tax if held till maturity and a hassle-free holding as it eliminates the storage cost of physical gold, said HDFC Securities.