Andhra Bank has opened the sale of Sovereign Gold Bonds in line with the Government of India scheme for 2018-19 – Series – I during April 16-20, 2018.
1. What is Sovereign Gold Bond (SGB)? Who is the issuer?
SGBs are government securities denominated in grams of gold. They are substitutes for holding physical gold. Investors have to pay the issue price in cash and the bonds will be redeemed in cash on maturity. The Bond is issued by Reserve Bank on behalf of Government of India.
2. Why should I buy SGB rather than physical gold? What are the benefits?
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 risk of loss of scrip etc.
Issue price for the current week has been fixed at Rs 3,114 per gram with a discount of Rs 50 per gram if subscribed through digital mode.
Andhra Bank customers having Internet banking facility can apply online through internet banking for SGBs and avail the discount. The bonds will be restricted for sale to resident Indian entities, including individuals, HUFs, Trusts, Universities and Charitable Institutions, who can apply for gold bonds.
The minimum subscription is one gram of gold and the maximum limit of subscription ranges from four kg to 20 kg for different categories of customers.
The tenor of the bonds is eight years with a provision for premature cancellation after five years on interest payment dates. RBI has notified 2.50 interest per annum payable on a half-yearly basis.