Sovereign Gold Bond Scheme 2020-21 - A Quick Look

Snapshot of the Sovereign Gold Bond Scheme 2020-21

(notified by the Ministry of Finance on April 13, 2020)

1. Eligibility

The Gold Bonds under this Scheme may be held by a -

i. Trust

ii. HUFs

iii. Charitable Institution

iv. University

v. By a person resident in India, being an individual, in his capacity

a. as such individual, or

b. on behalf of minor child, or

c. jointly with any other individual

2. Denomination, Subscription limit and Pricing

Denomination

The bonds will be issued in denominations of one gram of gold or multiples thereof.

Subscription limit (per fiscal year – April 1 – March 31)

Category	Minimum	Maximum
Individual	1 gram	4 kgs
HUF	1 gram	4 kgs
Trusts and similar entities	1 gram	20 kgs

In case of joint holding, the above limits will be applicable to the first applicant only.

Annual ceiling will include bonds subscribed under different tranches during initial issuance by Government and those purchased from the secondary market.

The ceiling on investment will not include the holdings as collateral by banks and other Financial Institutions.

Pricing

The nominal value of Gold Bonds will be in Indian Rupees fixed on the basis of simple average closing price of gold of 999 purity, published by the India Bullion and Jewellers Association Limited, for the last 3 working days of the week preceding the subscription period.

The issue price of the Gold Bonds will be INR 50 per gram less than the nominal value to those investors applying online and the payment against the application is made through digital mode.

3. Procedure for making application for subscription to Gold Bonds - Apply to any receiving office (Branches of all Scheduled Commercial Banks – public, private and foreign banks, designated Post Offices, Stock Holding Corporation of India Ltd., authorised Stock Exchanges) in Form ‘A’.

4. Calendar of Issuance -

Sl. No.	Tranche	Date of Subscription	Date of Issuance
1	2020-21 Series I	April 20-24, 2020	April 28, 2020
2	2020-21 Series II	May 11-15, 2020	May 19, 2020
3	2020-21 Series III	June 08-12, 2020	June 16, 2020
4	2020-21 Series IV	July 06-10, 2020	July 14, 2020
5	2020-21 Series V	August 03-07, 2020	August 11, 2020
6	2020-21 Series VI	Aug.31-Sept.04, 2020	September 08, 2020

5. Interest -

1. Payable from the date of issue
2. Fixed rate of 2.50% per annum on the nominal value of the bond
3. The interest will be payable in half-yearly rests and the last interest will be payable along with the principal on maturity.

6. Payment Options - through cash (upto a maximum of Rs. 20,000/-) or demand draft, or cheque, or electronic banking.

7. Redemption ––

i. Repayable on the expiration of 8 years from the date of the issue of the Bonds

ii. Premature redemption of Gold Bonds may be permitted after 5^th year from the date of issue of Bonds and such repayments will be made on next interest payment date.

iii. The redemption price will be based on simple average of closing price of gold of 999 purity of previous 3 working days, published by the India Bullion and Jewellers Association Limited.

8. Loan against Bonds -

i. The Gold Bonds issued under this Scheme may be used as collateral security for availing any loan.

ii. The Loan to Value ratio as applicable to any ordinary gold loan mandated by the Reserve Bank of India will also apply to the Bonds issued under this Scheme.

9. Tax Treatment -

i. The interest on the Gold Bond will be taxable as per the provisions of the Income-tax Act, 1961 (43 of 1961).

ii. The capital gains tax arising on redemption of these bonds to an individual is exempted. The indexation benefits will be provided to long-term capital gains arising to any person on transfer of bond.

10. Nomination -

i. An individual Non-Resident Indian may get the security transferred in his name on account of his being a nominee of a deceased investor and will need to hold the security till early redemption or till maturity. Further, the interest and maturity proceeds of the investment will not be repatriable.

11. Transfer of Gold Bonds - Transferable by execution of an Instrument of transfer as in Form ‘F’.

12. Trading of Gold Bonds - will be eligible for trading from such date as may be notified by the Reserve Bank of India.

13. Eligibility for Statutory Liquidity Ratio - Bonds acquired by the banks through the process of invoking lien/ hypothecation/ pledge alone, will be counted towards Statutory Liquidity Ratio.

Related Documents for Reference:

https://www.bseindia.com/markets/MarketInfo/DispNewNoticesCirculars.aspx?page=20200419-2

https://www.rbi.org.in/scripts/BS_PressReleaseDisplay.aspx?prid=49695