Sovereign gold bonds to trade under G group

New Delhi, June 10: Leading bourse BSE on Friday said Sovereign Gold Bonds (SGBs) will be traded under the ‘G’ group of equity cash segment along with other government securities.

Sovereign gold bonds will be settled on T+2 basis in the demat account of the investors, the BSE said in a circular. T+2 means that trades are settled two working days after the trading takes place.

For the purpose of risk management, the applicable margin for sovereign gold bond will be 10 per cent, National Stock Exchange (NSE) said in a separate circular.

Sovereign gold bonds will begin trading on the stock exchanges for the first time from June 13, providing investors a greater choice to diversify portfolio without the need to buy the metal in physical form.

Top exchanges BSE and NSE announced the launch of such bonds from Monday after the Reserve Bank of India (RBI) and markets regulator Sebi cleared the trading in the new instrument recently.

The scheme was announced by the government on October 30, 2015. These bonds are issued by the RBI on behalf of thegovernment. The minimum investment size in the secondary market will be as low as 1 gm. The tenure of the bond is eight years with an exit option from fifth year to be exercised on the interest payment dates.

The bonds will carry an interest rate of 2.75%( fixed rate) per annum on the amount of initial investment. Interest is to be paid half-yearly and the last interest will be payable on maturity, along with the principal. The product is accompanied with few beneficial tax features.