Sovereign Gold Bond 2020 subscription opens today; get Rs 50 per gram discount
Sovereign Gold Bond 2020 issue price during the subscription period shall be Rs 4016 per gram with the settlement date January 21, 2020
Sovereign Gold Bond 2020 (Series VIII) will be opened for the period January 13-17, 2020 according to a notification issued on 30 September 2019 by the Ministry of Finance, Government of India (GoI). The issue price of the Bond during the subscription period shall be Rs 4016 per gram with the settlement date January 21, 2020, as also published by RBI in its media release of 10 January 2020.
Government of India in consultation with the banking regulator has decided to allow a discount of Rs 50 per gram from the issue price to those investors who apply online and the payment is made through digital mode. For such investors the issue price of Gold Bond will be Rs 3,966 per gram, the official statement said.
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Sovereign Gold Bond (SGBs) are a kind of government bonds that are issued by the RBI on behalf of the government for investors to purchase. These are denominated in grams of gold. On redemption of the SGBs, investors get interest income and the prevailing price of gold. The sovereign gold bond scheme was launched in November 2015 with the objective to reduce the demand for physical gold and shift a part of the domestic savings, used for the purchase of the yellow metal, into financial savings.
The return on Sovereign Gold Bond is subject to how the gold performs and, typically, the returns of gold are matched with inflation. However, for higher returns, the market experts advise the investors to target equity as an asset class.
Among the advantages of the SGBs, the quantity of gold for which the investor pays is protected, since he receives the ongoing market price at the time of redemption/ premature redemption. The risks and costs associated with possession and storage are eliminated. SGB is free from issues like making charges and purity in the case of gold in jewelry form. The bond are held in the books of the RBI or in Demat form eliminating the risk of loss of scrip etc.
Indian residents as defined under the Foreign Exchange Management Act, 1999 are eligible to invest in SGBs. Eligible investors include individuals, HUFs, trusts, universities and charitable institutions. Individual investors with subsequent change in residential status from resident to a non-resident may continue to hold SGB till early redemption/maturity.
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