Gold is considered as one of the most precious things in Indian society. Women of India are among the top buyers of gold in the world. Because of the rising prices of gold in the international market, it has become next to impossible for middle-income families to buy gold.
Every year, the government of India introduces some gold schemes for the people of India. These schemes help people to get gold at lower rates than the market. The Sovereign Gold Bond Scheme (SGB) is also one such gold scheme introduced by the Government of India. The Reserve Bank of India issues these gold bonds. Under this scheme, you will get the gold in certificate form and it is an alternative to holding physical gold by holding it as ‘government securities’ and making an efficient gold investment.
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Gold Bond Scheme 2024
The Sovereign Gold Bond Scheme (SGB) was launched by the Indian Government in the year 2015. This scheme offers a substitute to the people who want to purchase or invest in physical gold.
Sovereign gold bonds are safe government securities. The value of these securities is expressed as grams of physical gold. The demand for SGBs has always been high in India. One can get SGBs from a bank, broker or SEBI authorized agent. After redeeming these bonds, the funds are transferred into the bank account.
SGBs are safe for customers who want to take low risks in purchasing/selling gold. Dealing in Sovereign Gold Bonds is cheaper than dealing in physical gold. You can store gold in Demat form by purchasing a bond under the Gold Bond Scheme. This scheme is also safe because it operates in electronic form.
The Sovereign Gold Bond scheme has various benefits for the investors. They are as under:
1. Additional Income
You will receive interest of 2.50% twice per year on gold bonds. You can earn extra income from these bonds.
2. No-Risk Investment
SGBs do not have risks like physical gold. There are no storage risks. However, they have certain market risks. You do not have to pay making charges or additional costs on SGBs.
You can exchange sovereign gold bonds to get a bank loan. These bonds act as collateral securities against bank loans.
4. Trading Instruments
Sovereign gold bonds are tradable on stock exchanges after the completion of a fixed period.
Only Indian residents are eligible for the Sovereign Gold Bond Scheme. Indian residents include individuals, HUFs, trusts, universities, and charitable institutions.
The value of SGBs is denominated in multiples of grams of gold.
Rate of Interest
The present interest rate for SGB is 2.50% per annum. You will get interested twice a year.
The Sovereign Gold Bond Scheme matures after 8 years. There is also an option to mature SGB in 5 years.
Issuance of SGBs
Only the Reserve Bank of India (RBI) can issue a Sovereign Gold Bond. Investors get a holding certificate for SGBs.
You must complete KYC norms to get a gold bond. These KYC norms are similar to the KYC norms that you follow while purchasing physical gold. You must submit all your ID proofs such as a PAN card, driving license, and passport for completing KYC.
Sovereign gold bonds are sold through post offices, banks, and Stock Holding Corporation of India Limited (SHCIL). SGBs are traded via BSE (Bombay Stock Exchange) and NSE (National Stock Exchange).
Interest that you receive on SGBs is taxable. Capital gains tax in cases of redemption is spared.
You can buy SGBs both online and offline. The process is almost the same for both online and offline modes but if you do it online, then it is much more convenient than visiting a physical office to buy offline. Also, RBI awards a discount of Rs 50/gram of gold purchased if you pay online.
You can buy online through Banks, brokers, and SHCIL.
1. For buying gold bonds online through Bank, you are required to have a net banking account.
2. Go to the official website of the bank and you can find the SGB option.
3. You can click that option and then fill out the application form.
4. After filling up all the details, you can specify the amount of gold in units that you want to purchase and make a payment.
1 Unit = 1 Gram
5. This way you can invest in Gold Bond Scheme online through banks.
If you have a Demat account, you can use the same to buy gold bonds online. The only difference will be that the purchased gold is credited into the Demat account. These bonds can be traded.
It is a very good alternative to operate in gold bonds if you are someone you don’t want to own gold physically. Also, it is more cost-effective way to buy/sell gold bonds than physical gold. If you are a trader, you can easily trade with SGBs. It’s an intelligent choice for low-risk investments.