The Sovereign Gold Bonds will be issued in six tranches from April 2020 to September 2020.
The Bonds will be sold through Scheduled Commercial banks (except Small Finance Banks and Payment Banks), Stock Holding Corporation of India Limited (SHCIL), designated post offices, and recognized stock exchanges viz., National Stock Exchange of India Limited and Bombay Stock Exchange Limited.
The salient features of the Bond are:
1.Instrument name
Sovereign Gold Bond 2020-21
2.Issuance
To be issued by Reserve Bank India on behalf of the Government of India.
3.Eligibility
The Bonds will be restricted for sale to resident individuals, HUFs, Trusts, Universities and Charitable Institutions.
4.Denomination
The Bonds will be denominated in multiples of gram(s) of gold with a basic unit of 1 gram.
5.Tenor
The tenor of the Bond will be for a period of 8 years with exit option after 5th year to be exercised on the interest payment dates.
6.Minimum size
Minimum permissible investment will be 1 gram of gold.
7.Maximum limit
The maximum limit of subscription shall be 4 KG for individual, 4 Kg for HUF and 20 Kg for trusts and similar entities per fiscal (April-March) notified by theGovernment from time to time. A self-declaration to this effect will be obtained.
8.Joint holder
In case of joint holding, the investment limit of 4 KG will be applied to the first applicant only.
9.Issue price
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 working days of the week preceding the subscription period.
10.Payment option
Payment for the Bonds will be through cash payment (upto a maximum of Rs.20,000) or demand draft or cheque or electronic banking.
11.Issuance form
The Gold Bonds will be issued as Government of India Stock under GS Act, 2006. The investors will be issued a Holding Certificate for the same. The Bonds are eligible for conversion into Dematform.
12.Redemption price
The redemption price will be in Indian Rupees based on previous 3 working days simple average of closing price of gold of 999 purity published by IBJA.
13.Sales channel
Bonds will be sold through Commercial banks, Stock Holding Corporation of India Limited (SHCIL), designated post offices (as may be notified) and recognised stock exchanges viz., National Stock Exchange of India Limited and Bombay Stock Exchange, either directly or through agents.
14.Interest rate
The investors will be compensated at a fixed rate of 2.50 per cent per annum payable semi-annually on the nominal value.
15.Collateral
Bonds can be used as collateral for loans. The loan-to- value (LTV) ratio is to be set equal to ordinary gold loan mandated by the Reserve Bank from time to time.
16.KYC Documentation
Know-your-customer (KYC) norms will be the same as that for purchase of physical gold. KYC documents such as Voter ID, Aadhaar card/PAN or TAN /Passport will be required.
Every application must be accompanied by the
‘PAN Number’ issued by the Income Tax Department to individuals and other entities.
17.Tax treatment
The interest on Gold Bonds shall be taxable as per the provision of Income Tax Act, 1961 (43 of 1961).
18.Tradability
Bonds will be tradable on stock exchanges within a fortnight of the issuance on a date as notified by the RBI.