The government has fixed the issue price of the fourth tranche of Sovereign Gold Bond Scheme 2020-21 at a fixed price of Rs 4,852 per gram of gold.
The fourth instalment of the Sovereign Gold Bond (SGB) scheme, issued by the Reserve Bank of India (RBI) on behalf of the government, will open for subscription for five days from Monday.
The Sovereign Gold Bond Scheme 2020-21-Series IV will be opened for subscription for the period between July 6 and July 10.
How is gold bond price fixed?
The issue price of sovereign gold bonds is fixed based on the recent closing price of gold as published by the India Bullion and Jewellers Association Ltd for gold of 999 purity. The minimum permissible investment in gold bonds is one gram of gold.
The issue price for the fourth tranche of the SGB 2020-21 scheme is Rs 4,852 per gram.
The bonds will be denominated in multiples of gram(s) of gold with a basic unit of 1 gram and the tenor of the Sovereign Gold Bond will be eight years with exit option after the fifth year to be exercised on interest payment dates.
Only resident individuals, Hindu Undivided Families (HUFs), trusts, universities and charitable institutions can buy the bonds.
The minimum permissible investment will be 1 gram of gold and the maximum limit of subscription shall be 4kg for individuals, 4kg for HUFs and 20kg for trusts and similar entities per fiscal (April-March).
Why invest in gold bond?
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 SGB offers a superior alternative to holding gold in physical form. The risks and costs of storage are eliminated. Investors are assured of the market value of gold at the time of maturity and periodical interest.
SGB is free from issues like making charges and purity in the case of gold in jewellery form. The bonds are held in the books of the RBI or in Demat form eliminating the risk of loss of scrip etc.
