2017-10-07

Sovereign Gold Bond Scheme 2017 -18– Series-III

Sovereign Gold Bond Scheme 2017 -18– Series-III 

Government of India, in consultation with the Reserve Bank of India, has decided to issue Sovereign Gold Bonds 2017-18 – Series-III. Applications for the bond will be accepted from October 09, 2017 to December 27, 2017. The Bonds will be issued on the succeeding Monday after each subscription period.
The Bonds will be sold through 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. The features of the Bond are given below:

SL. NO.ItemDetails
1Product nameSovereign Gold Bond 2017-18-Series-III
2IssuanceTo be issued by Reserve Bank India on behalf of the Government of india.
3EligibilityThe Bonds will be restricted for sale to resident Indian entities including individuals, HUFs, Trusts, Universities and Charitable Institutions.
4DenominationThe Bonds will be denominated in multiples of gram(s) of gold with a basic unit of 1 gram.
5TenorThe tenor of the Bond will be for a period of 8 years with exit option from 5th year to be exercised on the interest payment dates.
6Minimum sizeMinimum permissible investment will be 1 gram of gold.
7Maximum limitThe maximum limit of subscribed shall be 4 KG for individual, 4 Kg for HUF and 20 Kg for trusts and similar entities per fiscal (April-March) notified by the effect will be obtained. The annual ceiling will include bonds subscribed under different tranches during initial issuance by Government and those purchase from the Secondary Market.
8Joint holderIn case of joint holding, the investment limit of 4 KG will be applied to the first applicant only.
9Issue pricePrice 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 business days of the week preceding the subscription period. The issue price of the Gold Bonds will be 50 per gram less for thosewho subscribe online and pay through digital mode.
10Payment optionPayment for the Bonds will be through cash payment (upto a maximum of 20000) or demand draft or cheque or electronic banking.
11Issuance formThe Gold Bonds will be issued as Government of India Stocks under GS Act, 2006. The investors will be issued a Holding Certificate for the same. The Bonds are eligible for conversion into demat form.
12Redemption priceThe redemption price will be in Indian Rupees based on simple average of closing price of gold of 999 purity of previous 3 business days published by IBJA.
13Sales channelBonds will be sold through banks, Stock Holding Corporation of India Limited (SHCIL), designated post offices as may be notified and recognized stock exchanges viz., National Stok Exchange of India Limited and Bombay Stock Exchange, either directly or through agents.
14Interest rateThe investors will be compensated at a fix rate of 2.50 percent per annum payable semi-annually on the nominal value.
15CollateralBonds 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.
16KYC DocumentationKnow-your-customer (KYC) norms will be the same as that for purchase of physical gold. KYC documents such as Voter ID, Aadhar Card/PAN Card or TAN/Passport will be required.
17Tax treatmentThe interest on Gold Bonds shall be taxable as per the provision of Income Tax Act, 1961 (43 of 1961). The capital gains tax arising on redemption of SGB to an individual has been exempted. The indexation benefits will be provided to long term capital gains to any person on transfer of bond.
18TradabilityBonds will be tradable on stock exchange within a fortnight of the issuance on a date as notified by the RBI.
19SLR eligibilityThe Bonds will be eligible for Statutory Liquidity Ratio purposes.
20CommissionCommission for distribution of bond shall be paid at the rate of 1% of the total subscription received by the receiving offices and receiving offices shall share at least 50% of the commission so received with the agents or sub agents for the business procured through them.
Source: PIB

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