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Sovereign Gold Bond Scheme 2019-20 Series II: Five points to know before investing

New Delhi: The Sovereign Gold Bond Scheme 2019-20 – Series II will be opened for subscription for the period from July 08 – July 12, 2019, according to a press release by Reserve Bank of India (RBI). “The nominal value of the bond based on the simple average closing price for gold of 999 purity of the last three business days of the week preceding the subscription period,  i.e. July 03 to July 05, 2019, works out to Rs 3,443 per gram,” said in a press release.

The government, in consultation with the Reserve Bank of India, has decided to offer a discount of Rs 50 per gram less than the nominal value to those investors applying online and the payment against the application is made through digital mode. For such investors, the issue price of Gold Bond will be Rs 3,393per gram of gold.

It may be noted that the Government of India, in consultation with the Reserve Bank of India (RBI), has decided that Sovereign Gold Bonds (SGB) will be issued every month from June 2019 to September 2019. RBI had said this in its May 30, 2019 notification. 

Here are five points you should know-

1. “The Government of India, in consultation with the Reserve Bank of India, has decided to offer a discount of Rs 50 per gram less than the nominal value to those investors applying online and the payment against the application is made through digital mode. For such investors, the issue price of Gold Bond will be Rs 3,146 per gram of gold,” said RBI in a statement.

2. Entities such as Trust, HUFs, Charitable Institution and University are eligible to subscribe to this issue. The maximum limit of subscription for individual and HUF is 4Kg and 20 Kg for trusts and similar entities per financial year (from April to March).

3. The bonds shall bear the interest from the date of issue at the rate of 2.50 per cent per year on the nominal value. The interest will be paid in half-yearly and the last interest shall be payable along with principal on maturity.

Sovereign gold bond

4. Investors can apply for these bonds through banks (excluding RRBs, Small Finance Banks and Payment Banks), Stock Holding Corporation of India Ltd (SHCIL), designated post offices and stock exchanges.

5. Sovereign Gold Bonds are exempt from capital gains arising to any person on the transfer of bond. The bonds may be used as collateral for loans. The loan against SGBs would be subject to the decision of the lending bank or institution, and cannot be inferred as a matter of right by the SGB holder.

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