What are Sovereign Gold Bond?

"Always invest in gold", our elders have taught us. It pays off well, they said, and they are right. In India, people have traditionally invested in gold, especially since many cultures consider this yellow metal precious. So if you are planning to invest in it, "Go right ahead", we say! In fact, why buy chunky jewellery and worry about safe keeping when you can invest in a sovereign gold bond (SGB)? It’s less risky, it’s convenient, and you don’t have to worry about storage.

Sovereign gold bonds are RBI mandated certificates issued against grams of gold, allowing individuals to invest in gold without the strain of safekeeping their physical asset. Sovereign gold bonds act as a secure investment tool among individuals, as gold prices are less susceptible to market fluctuations. Owing to the popularity and widespread demand for gold, prices of such assets tend to rise significantly over time, a highly prospective investment avenue.

Sovereign Gold Bond Features

  • Eligibility: The bonds will be restricted for sale to resident Indian entities including individuals, HUFs, Trusts, Universities and Charitable institutions. For online application through ICICI Bank, the bonds are for sale to only ‘individuals’ through the Internet Banking Channel and iMobile App. Customers falling into other category of investors may however approach the branch and fill-up the application form to apply for the tranche.
  • Denomination: The bonds will be denominated in units of one gram of gold and multiples thereof.
  • Minimum size: Minimum permissible investment will be 1 gram of gold.
  • Maximum limit: Maximum limit of subscription shall be of 4 kg for individuals, 4 kg for Hindu Undivided Family (HUF) and 20 kg for trusts and similar entities notified by the government from time to time
  • Interest rate: The investors will be paid Interest on the amount of initial investment at the rate notified by RBI for a particular tranche at the time of its launch and is payable semi-annually.
  • Tenor: The tenor of the bond will be for a period of 8 years with an exit option from 5th year onwards to be exercised on the interest payment dates.
  • Redemption: Redemption price shall be fixed in Indian Rupees and the redemption price shall be based on simple average of closing price of gold of 999 purity of previous 3 business days from the date of repayment, published by the India Bullion and Jewelers Association Limited

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