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Sovereign Gold Bond, abbreviated as SGB, is a government security issued by the Reserve Bank of India (RBI) on behalf of the Government of India. They are denominated in grams of gold and are linked to the price of gold in India. They are also interest-bearing bonds that carry an interest of 2.5% p.a. paid twice per year. [1][2]
The tenor of the bond is 8 years. However, there is an option to prematurely withdraw with the RBI 5 years after issue. The bonds are listed and traded on both the Indian stock exchanges, the NSE and the BSE. It can also be transferred or sold to any eligible investor, without redeeming it with the RBI. [1]
History[edit]
The scheme was first notified by the Department of Economic Affairs on 14 January 2016 under the Government Securities Act, 2006. The first subscription required a minimum quantity of 2 grams, with a maximum limit of 500 grams. The first series was open for subscription from 18 January 2016 and ended on 22 January 2016. The bonds initially paid 2.75% p.a. as interest, which was later decreased to 2.5% p.a..[3][2]
Eligibility[edit]
Persons resident in India as defined under Foreign Exchange Management Act, 1999 are eligible to invest in SGBs. Eligible investors include individuals, Hindu Undivided Families, trusts, universities and charitable institutions. Individual investors with subsequent change in residential status from resident to non-resident may continue to hold SGBs till early redemption/maturity. [1]
Bonds are issued in denominations of 1 gram of gold, and in multiples thereof. Every eligible investor can buy a maximum of 4 KGs of gold in a financial year. The bond can be held in both dematerialised form and non-dematerialised form, so a demat account is not necessary for buying the bond. The RBI keeps tracks of the investors and the units each investor holds in its books, eliminating risks such as theft associated with normally owning gold.[1]
Price[edit]
The issue price is calculated as the simple average of closing price of gold of 999 purity published by the India Bullion and Jewelers Association Limited (IBJA), for the last 3 business days of the week preceding the subscription period.
The redemption price, both prematurely and on maturity, is calculated as the simple average of closing price of gold of 999 purity published by the IBJA, of the previous 3 business days before the date of repayment.[4]
Comparison with other forms of gold investments[edit]
SGBs, purely as an investment format, can be compared to other forms of investing in Gold.[5]
| SGB | Physical gold | Gold ETF and mutual funds | Digital gold | |
|---|---|---|---|---|
| Storage | No risk of theft | Significant risk of theft | Stored in vaults. Low risk of theft[6] | Stored in vaults. Low risk of theft[7] |
| Regulated by | RBI, and by extension, Government of India | Not regulated | SEBI, and by extension, Government of India | Not regulated |
| Charges | No making charges, GST, or expense ratio | Making charges from 8% to 35%. GST of 3%. No expense ratio. | No making charges or GST. Expense ratio up to 1% is allowed. | No making charges. GST of 3% and commissions are applicable. No expense ratio |
| Interest | Fixed at 2.5% per annum | No interest payments | No interest payments | No interest payments |
| Taxation | No tax on capital gains. Interest is taxed at slab.[1][8] | Tax on capital gains | Tax on capital gains | Tax on capital gains |
Issue history[edit]
| S No | Tranche | ISIN | Issue Date | Issue price/unit (₹) | Units subscribed (grams) | Redemption price/unit (₹) | CAGR Returns (Absolute) (%) |
|---|---|---|---|---|---|---|---|
| 1 | 2015-I | IN0020150085 | November 30, 2015 | 2684 | 913571 | 6132 [10][11] | 10.87 (128) |
| 2 | 2016-I | IN0020150101 | February 8, 2016 | 2600 | 2869973 | 6271 [12][13] | 11.63 (141) |
| 3 | 2016-II | IN0020150119 | March 29, 2016 | 2916 | 1119741 | 6601 [14][15] | 10.75 (126) |
| 4 | 2016-17 Series I | IN0020160027 | August 5, 2016 | 3119 | 2953025 | ||
| 5 | 2016-17 Series II | IN0020160043 | September 30, 2016 | 3150 | 2615800 | ||
| 6 | 2016-17 Series III | IN0020160076 | November 17, 2016 | 3007 | 3598055 | ||
| 7 | 2016-17 Series IV | IN0020160126 | March 17, 2017 | 2943 | 2220885 | ||
| 8 | 2017-18 Series I | IN0020170018 | May 12, 2017 | 2951 | 2027695 | ||
| 9 | 2017-18 Series II | IN0020170034 | July 28, 2017 | 2830 | 2349953 | ||
| 10 | 2017-18 Series III | IN0020170059 | October 16, 2017 | 2956 | 264815 | ||
| 11 | 2017-18 Series IV | IN0020170067 | October 23, 2017 | 2987 | 378945 | ||
| 12 | 2017-18 Series V | IN0020170075 | October 30, 2017 | 2971 | 174024 | ||
| 13 | 2017-18 Series VI | IN0020170083 | November 6, 2017 | 2945 | 153356 | ||
| 14 | 2017-18 Series VII | IN0020170091 | November 13, 2017 | 2934 | 175121 | ||
| 15 | 2017-18 Series VIII | IN0020170109 | November 20, 2017 | 2961 | 135666 | ||
| 16 | 2017-18 Series IX | IN0020170117 | November 27, 2017 | 2964 | 105512 | ||
| 17 | 2017-18 Series X | IN0020170125 | December 4, 2017 | 2961 | 107380 | ||
| 18 | 2017-18 Series XI | IN0020170133 | December 11, 2017 | 2952 | 81614 | ||
| 19 | 2017-18 Series XII | IN0020170141 | December 18, 2017 | 2890 | 111218 | ||
| 20 | 2017-18 Series XIII | IN0020170158 | December 26, 2017 | 2866 | 131958 | ||
| 21 | 2017-18 Series XIV | IN0020170166 | January 1, 2018 | 2881 | 327434 | ||
| 22 | 2018-19 Series I | IN0020180033 | May 4, 2018 | 3114 | 650337 | ||
| 23 | 2018-19 Series II | IN0020180249 | October 23, 2018 | 3146 | 312258 | ||
| 24 | 2018-19 Series III | IN0020180314 | November 13, 2018 | 3183 | 409398 | ||
| 25 | 2018-19 Series IV | IN0020180389 | January 1, 2019 | 3119 | 207886 | ||
| 26 | 2018-19 Series V | IN0020180462 | January 22, 2019 | 3214 | 243606 | ||
| 27 | 2018-19 Series VI | IN0020180561 | February 12, 2019 | 3326 | 207388 | ||
| 28 | 2019-20 Series I | IN0020190073 | June 11, 2019 | 3196 | 459789 | ||
| 29 | 2019-20 Series II | IN0020190081 | July 16, 2019 | 3443 | 535947 | ||
| 30 | 2019-20 Series III | IN0020190107 | August 14, 2019 | 3499 | 1024837 | ||
| 31 | 2019-20 Series IV | IN0020190115 | September 17, 2019 | 3890 | 627892 | ||
| 32 | 2019-20 Series V | IN0020190370 | October 15, 2019 | 3788 | 455776 | ||
| 33 | 2019-20 Series VI | IN0020190388 | October 30, 2019 | 3835 | 693210 | ||
| 34 | 2019-20 Series VII | IN0020190461 | December 10, 2019 | 3795 | 648304 | ||
| 35 | 2019-20 Series VIII | IN0020190537 | January 21, 2020 | 4016 | 522119 | ||
| 36 | 2019-20 Series IX | IN0020190545 | February 11, 2020 | 4070 | 405957 | ||
| 37 | 2019-20 Series X | IN0020190552 | March 11, 2020 | 4260 | 757338 | ||
| 38 | 2020-21, Series I | IN0020200062 | April 28, 2020 | 4639 | 1772874 | ||
| 39 | 2020-21, Series II | IN0020200088 | May 19, 2020 | 4590 | 2544294 | ||
| 40 | 2020-21, Series III | IN0020200104 | June 16, 2020 | 4677 | 2388328 | ||
| 41 | 2020-21, Series IV | IN0020200146 | July 14, 2020 | 4852 | 4130820 | ||
| 42 | 2020-21, Series V | IN0020200161 | August 11, 2020 | 5334 | 6349781 | ||
| 43 | 2020-21, Series VI | IN0020200195 | September 8, 2020 | 5117 | 3190133 | ||
| 44 | 2020-21, Series VII | IN0020200203 | October 20, 2020 | 5051 | 1859518 | ||
| 45 | 2020-21, Series VIII | IN0020200286 | November 18, 2020 | 5177 | 1573457 | ||
| 46 | 2020-21, Series IX | IN0020200377 | January 5, 2021 | 5000 | 2869886 | ||
| 47 | 2020-21, Series X | IN0020200385 | January 19, 2021 | 5104 | 1214048 | ||
| 48 | 2020-21, Series XI | IN0020200393 | February 9, 2021 | 4912 | 1227915 | ||
| 49 | 2020-21, Series XII | IN0020200427 | March 9, 2021 | 4662 | 3230907 | ||
| 50 | 2021-22, Series I | IN0020210053 | May 25, 2021 | 4777 | 5318973 | ||
| 51 | 2021-22, Series II | IN0020210061 | June 1, 2021 | 4842 | 1898475 | ||
| 52 | 2021-22, Series III | IN0020210087 | June 8, 2021 | 4889 | 1479232 | ||
| 53 | 2021-22, Series IV | IN0020210111 | July 20, 2021 | 4807 | 2923762 | ||
| 54 | 2021-22, Series V | IN0020210129 | August 17, 2021 | 4790 | 2292743 | ||
| 55 | 2021-22, Series VI | IN0020210145 | September 7, 2021 | 4732 | 3520341 | ||
| 56 | 2021-22, Series VII | IN0020210178 | November 2, 2021 | 4761 | 3248238 | ||
| 57 | 2021-22, Series VIII | IN0020210228 | December 7, 2021 | 4791 | 2480493 | ||
| 58 | 2021-22, Series IX | IN0020210236 | January 18, 2022 | 4786 | 2333188 | ||
| 59 | 2021-22, Series X | IN0020210319 | March 8, 2022 | 5109 | 1539694 | ||
| 60 | 2022-23, Series I | IN0020220045 | June 28, 2022 | 5091 | 2557864 | ||
| 61 | 2022-23, Series II | IN0020220078 | August 30, 2022 | 5197 | 3360408 | ||
| 62 | 2022-23, Series III | IN0020220110 | December 27, 2022 | 5409 | 2811010 | ||
| 63 | 2022-23, Series IV | IN0020220169 | March 14, 2023 | 5611 | 3531586 | ||
| 64 | 2023-24, Series I | IN0020230069 | June 27, 2023 | 5926 | 7769290 | ||
| 65 | 2023-24, Series II | IN0020230093 | September 20, 2023 | 5923 | 11673960 | ||
| 66 | 2023-24, Series III | IN0020230168 | December 28, 2023 | 6199 | 12106807 | ||
| 67 | 2023-24, Series IV | IN0020230184 | February 21, 2024 | 6263 | 12785729 | ||
| TOTAL | 146961537 |
Note: CAGR calculations are without interest payments and post-tax, since capital gains due to appreciation in price of gold in SGB is tax free.[8]
References[edit]
- ^ a b c d e "Sovereign Gold Bond Scheme". Reserve Bank of India. Archived from the original on 9 April 2024. Retrieved 25 April 2024. || source-date=2019-02-04
- ^ a b "What is Sovereign Gold Bonds Interest Rate & How Its Paid?". ICICI Direct. 22 December 2022. Archived from the original on 8 February 2023. Retrieved 25 April 2024.
- ^ "Notification" (PDF). The Gazette of India. New Delhi. 14 January 2015. pp. 39–40. Archived (PDF) from the original on 25 April 2024. Retrieved 25 April 2024.
- ^ Kulkarni, Sneha (15 February 2024). "New Sovereign Gold Bond tranche: Is SGB Series IV 2023-24 issue price highest ever offered?". The Economic Times. ISSN 0013-0389. Archived from the original on 24 February 2024. Retrieved 25 April 2024.
- ^ "What are Sovereign Gold Bonds (SGBs)?". Zerodha Support. Archived from the original on 8 December 2023. Retrieved 25 April 2024.
- ^ Kriplani, Jash (9 November 2021). "Explained: All about how gold ETFs give investors the purest yellow metal". Moneycontrol. Archived from the original on 9 November 2021. Retrieved 25 April 2024.
- ^ Das, Vipul (22 April 2023). "Digital Gold in Emerging Markets: What are the opportunities and challenges for investors?". Live Mint. Archived from the original on 22 April 2023. Retrieved 25 April 2024.
- ^ a b "Sovereign Gold Bond Scheme (SGB)". Union Bank of India. Archived from the original on 3 October 2023. Retrieved 25 April 2024.
- ^ "Data of Sovereign Gold Bonds (Tranche wise) issued till April 23, 2024". Reserve Bank of India. 23 April 2024. Archived from the original on 25 April 2024. Retrieved 26 April 2024.
- ^ "Final redemption under Sovereign Gold Bond (SGB) Scheme - Price for final redemption of SGB 2015-I due on November 30, 2023 - RBI". Reserve Bank of India. Retrieved 15 May 2024.
- ^ Ray, Abeer (30 November 2023). "SGB 2015-I series set for redemption on November 30 with 128% profit on investment; all you need to know". Live Mint. Archived from the original on 30 November 2023. Retrieved 15 May 2024.
- ^ "Final redemption under Sovereign Gold Bond (SGB) Scheme - Redemption Price for final redemption of SGB 2016-I due on February 08, 2024 - RBI". Reserve Bank of India. Retrieved 15 May 2024.
- ^ Kaul, Abhinav (9 February 2024). "Sovereign Gold Bond 2016-I matures; gives 13.6% return and outperforms gold funds". Moneycontrol. Archived from the original on 10 May 2024. Retrieved 15 May 2024.
- ^ "Final redemption under Sovereign Gold Bond (SGB) Scheme - Redemption Price for final redemption of SGB 2016 Series II due on March 28, 2024 (March 29, 2024 being a holiday) - RBI". Reserve Bank of India. Retrieved 15 May 2024.
- ^ Kulkarni, Sneha (27 March 2024). "Sovereign Gold Bond (SGB): Final redemption price of SGB 2016 Series II announced". The Economic Times. ISSN 0013-0389. Archived from the original on 23 March 2024. Retrieved 15 May 2024.