The subscription period for the next portion of Sovereign Gold Bond (SGB) 2021-22 will be for five days starting from October 25. There will be a total of four tranches between October 2021 to March 2022.
The total number of tranches for the SGBs issue will be ten. It was issued in six tranches between March 2021 to September 2021.
The current subscription period for the SBG series VII will be from October 25 to October 29 2021. The issue of SGBs 2021-22 will be in November 2021.
SGBs are government securities represented in the terms of gold, acting as substitutes for physical gold. SGBs are issued by RBI on behalf of the Indian government. They eliminate the risk and cost of storage. At the time of redemption, the investors receive cash according to the market price of gold with periodical interest.
The bonds will be sold through banks, National stock exchanges – BSE and NSE, Stock Holding Corporation of India Limited (SHCIL) and Clearing Corporation of India Limited (CCIL).
The SGBs 2021-22 will be an issue in Indian rupees based on the simple average of the closing price of gold of 99 purity. Gold of 99 purity is the purest form of gold, which have 99.9% content as gold and are not mixed with any other metal.
Indian Bullion and Jewelers Association issues the closing price of the bonds, and the average of the last three working days before the subscription date will be considered.
The bonds will be issued at Rs 50 per gm less for those who will subscribe through online modes and make payments digitally.
The bonds will be redeemed after eight years, and it has an exit option after five years.
The minimum investment to be made will be 1 gram of gold. The maximum limit will be 4 kg for individuals, 4 kg for Hindu Undivided Family (HUF) and 20kgs for trusts and similar entities.
The investors will be provided with an interest rate of 2.5% per annum payable semi-annually on the nominal value (face value of the bond without considering inflation).
The KYC norms will be applicable and will be similar to that for the purchase of physical gold.
SGBs were introduced in November 2015 to reduce the demand for physical gold and motivate people to shift their domestic savings to financial savings.
SGBs are transparent, keep a record of the import-export value of gold and are safe because they are backed by the government, reducing the chances of default.