Know about sovereign gold bond

WHAT IS IT?

Sovereign gold bonds are government securities denominated in grams of gold. It is substitute for physical gold. You have to pay the issue price in cash and the bonds will be redeemed in cash on maturity. It is issued by the Reserve Bank on behalf of the Government of India. You are assured of the market value of gold at the time of maturity and periodical interest. The bonds are held in the books of the RBI or in Demat form eliminating risk of loss of scrip. Remember that there may be a risk of capital loss if the market price of gold declines. Investor does not lose in terms of units of gold he has paid for.

LIMITS

The bonds are issued in denominations of one gram of gold and in multiples of one gram. The minimum investment required is one gram and maximum limit of subscription is 4kg for individuals, 4kg for Hindu Undivided Family (HUF) and 20kg for trusts and similar entities notified by the government from time to time per fiscal year (April – March). The annual ceiling will include bonds subscribed under different tranches during initial issuance by government and those purchased from the secondary market. The nominal value will be fixed on the basis of simple average of closing price of gold of 999 purity.

INTEREST AND ELIGIBILITY

You earn an interest of 2.50% (fixed rate) per annum on the amount of initial investment. Interest will be credited semi-annually to the bank account of the investor and the last interest will be payable on maturity along with the principal. If you are a resident of India, then you are eligible to invest in SGB. You can opt to hold it jointly. You can also apply on behalf of the minor as well. You can get the application form from banks or designated post offices. You can also download from the RBI’S website. The know-your-customer norms will be the same as that for purchase of physical form of gold.

HOW IT IS DONE?

Fraudsters place a skimmer or a card reader in the card-swiping slot. This way they copy your debit or credit card information and use it for fraudulent transactions. They also steal your PIN using a hidden camera. In some cases, the thieves use rubber key pads and place them

on the keypad.