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 Sovereign Gold Bonds

Sovereign Gold Bonds

A sovereign gold bond is a government security that is denominated in gold grams. It is a substitute for physical gold. Investors invest in these bonds when the scheme opens and it is redeemed on maturity. The Reserve Bank of India on behalf of the Government of India manages the sovereign gold bond scheme.

Bank of Baroda offers customers the opportunity to invest in the sovereign gold bond scheme through all of its branches in the country.

Sovereign Gold Bond 2020-21, Series I/II/III/IV/V/VI

The Sovereign Gold Bonds will be issued every month from April 2020 to September 2020 as per the calendar specified below, provided that the Central Government may, with prior notice, close the Scheme at any time before the period specified below

S. No Tranche Date of Subscription Date of Issuance
1

SGB 2020-21 Series I

April 20-24, 2020

April 28, 2020

2

SGB 2020-21 Series II

May 11-15, 2020

May 19, 2020

3

SGB 2020-21 Series III

June 8-12, 2020

June 16, 2020

4

SGB 2020-21 Series IV

July 6-10, 2020

July 14, 2020

5.

SGB 2020-21 Series V

August 3-7, 2020

Aug 11, 2020

6.

SGB 2020-21 Series VI

August 31September 4, 2020

Sep 08, 2020

Eligibility for Investment:

The Gold Bonds under this scheme may be held by a Trust, HUFs, Charitable Institutions, University or by a person resident in India, being an individual, in his capacity as such individual, or on behalf of minor child, or jointly with any other individual.

Form of Security:

The Gold Bonds shall be issued in the form of Stock Certificate, as specified in Form ‘C’.
The Gold Bonds shall be eligible to be converted into Demat form.

Applications:

Application form from investors will be received at Branches during normal banking hours on the weeks of subscription. Subscription for the Bonds may be made in the prescribed application form (Form ‘A’) or in any other form as near as thereto stating clearly the grams of gold and the full name and address of the applicant. The Branches need to ensure that the application is complete in all respects as incomplete applications are liable to be rejected. Every application must be accompanied by the ‘PAN details’ issued by the Income Tax Department to the investor(s). The Branch shall issue an acknowledgement receipt in Form ‘B’ to the applicant. The Branches may guide the investors to apply online.

Date of Issue:

The date of issuance shall be as per the details given above.

Denomination:

The Bonds shall be denominated in units of one gram of gold or multiples thereof. Minimum investment in the Bonds shall be one gram with a maximum limit of subscription per fiscal year (April-March) of 4 Kg for individuals, 4 Kg for Hindu Undivided Family (HUF) and 20 Kg for Trusts and similar entities notified by the government from time to time (a self declaration to this effect will be obtained) provided that:

  • in case of joint holding, the above limits shall 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; and
  • the ceiling on investment will not be include the holdings as collateral by banks and other Financial Institutions.

Issue price:

The issue price for SGB-Series-2020-21-Series IV is Rs. 4,852/- per Gram and GOI in consultation with RBI has decided to offer a discount of Rs. 50/- per gram less than the nominal value for the investors applying online. For such investors, the issue price will be Rs. 4,802/- per gram.

Interest:

The Bonds shall bear interest from the date of issue at the rate of 2.5 percent (fixed rate) per annum on the nominal value. Interest shall be paid in half-yearly rests and the last interest shall be payable along with principal on maturity.

Receiving offices:

Scheduled Commercial Banks (excluding RRBs, Small Finance Banks and Payment Banks), designated Post Offices (as may be notified), Stock Holding Corporation of India Ltd (SHCIL) and recognized stock exchanges viz., National Stock Exchange of India Limited and Bombay Stock Exchange Ltd. are authorized to receive applications for the Bonds either directly or through agents.

Payment Options:

Payment shall be accepted in Indian Rupees through cash* upto maximum of Rs. 20,000/-or Demand Drafts* or Transfer Cheque or Electronic Banking*. Where payment is made through Cheque or Demand Draft, the same shall be drawn in favor of the Branch.

Redemption:

The Bonds shall be repayable on the expiration of eight years from the date of issue of the Bonds. Pre-mature redemption of the Bond is permitted after fifth year of the date of issue of the Bonds and such repayments shall be made on the next interest payment date.
The redemption price shall be fixed in Indian Rupees and the redemption price shall be based on simple average of closing price of gold of 999 purity of the previous 3 working days, published by the India Bullion and Jewelers Association Limited.
RBI/depository shall inform the investor about the date of maturity of the Bond one month before its maturity.

Eligibility for Statutory Liquidity Ratio (SLR)

Bonds acquired by the banks through the process of invoking lien/hypothecation/pledge alone shall be counted towards Statutory Liquidity Ratio.

Loan against Bonds (Collateral)**

The Bonds may be used as collateral for loans. The Loan to Value ratio will be as applicable to ordinary gold loan mandated by the RBI from time to time. The lien on the Bonds shall be marked in the depository by the authorized banks.

*The loan against SGBs would be subject to decision of the lending bank/institution, and cannot be inferred as a matter of right by the SGB holder.

Tax Treatment

Interest on the Bonds shall be taxable as per the provisions of the Income-tax Act, 1961 (43 of 1961). The capital gains tax arising on redemption of SGB to an individual has been exempted. The indexation benefits will be provided to long term capital gains arising to any person on transfer of bond.

Joint Holding and Nomination

Multiple Joint holders and nominees (of first holder) are permitted. In case of joint holding, the investment limit of -4- Kgs will be applied to the first applicant only.
Nomination of and its cancellation shall be made in Form ‘D’ and Form ‘E’, respectively.

  • An individual Non - resident Indian may get the security transferred in his name on account of his being a nominee of a deceased investor provided that:
    the Non-Resident investor shall need to hold the security till early redemption or till maturity; and
  • The interest and maturity proceeds of the investment shall not be repatriable.

Transferability

The Bonds issued in the form of Stock Certificate shall be transferable by execution of an Instrument of transfer as in Form ‘F’.

Tradability:

The Bonds shall be eligible for trading on date notified by the Reserve Bank of India. (It may be noted that only bonds held in Demat form with depositories can be traded in Stock Exchanges)

Know-Your-Customer (KYC) requirements:

Every application must be accompanied by the ‘PAN details’ issued by the Income Tax Department to the investors (individuals and other entities). KYC Documents such as Voter ID, Aadhaar Card/PAN or TAN/Passport will be required.

Cancellation:

Cancellation of application permitted till the closure of the issue, i.e. until Friday of the particular week of subscription. Part cancellation of submitted request for purchase of gold bonds is not permitted.

Lien Marking:

As the bonds are government securities, lien marking etc. will be as per the extant legal provisions of Government Securities Act, 2006 and rules framed there under.
All branches of Bank of Baroda in India are authorized to issue SGB.

Sovereign Gold Bonds Series-2020-21 Series-I

Sovereign Gold Bond Scheme 2020-21, Series I, begins from 20th April 2020 and will continue till 24th April 2020. The issue price for SGB-Series-2020-21-Series I is Rs. 4,639/- per Gram and GOI in consultation with RBI has decided to offer a discount of Rs. 50/- per gram less than the nominal value for the investors applying online. For such investors, the issue price will be Rs. 4,589/- per gram.

Sovereign gold bond benefits:

Form of the Gold Bonds

The gold that is denominated for the bond can be held in form of Stock certificate or may be held in demat form. There is no need to worry about storage and the hassles involved in dealing with physical gold.

No capital gains tax on redemption

Even though the interest earned on a sovereign gold bond is taxable, the long term capital gains on redemption are exempted from tax. This means that all gains made on the bond will be tax free.

Discount for online investors

The Government of India has made a provision that online investors will get a discount of Rs. 50 on the price of the bond. For investors applying online and paying online, they can avail this offer to reduce their investment price.

Collateral for loans

The sovereign gold bonds can be used as collateral for loans. The lien on the Bonds shall be marked in the depository by the lending Bank. The Loan against SGBs would be subject to decision of the Lending Bank and cannot be inferred as a matter of right.

Redemption linked to prevalent gold price

The sovereign gold bond is linked to the prevalent gold price. The redemption price of the sovereign gold bond will be simple average of closing price of gold of 999 purity of the previous 3 working days, published by the India Bullion and Jewellers Association Limited.

Sovereign gold bond features

Minimum and maximum investment:

The minimum investment that can be made in this bond is 1 gram. Each individual or HUF can hold a maximum of 4kgs every year in such bonds. For trusts, charitable institutions, the maximum limit is 20kgs.

Fixed interest rate:

Interest will be earned on the Sovereign Gold Bonds at the rate of 2.5% annually, paid semi-annually.

Transparency in prices

The prices of the gold bond are transparent since they are linked to the price of gold in the market.

Exit option

There is an exit option for investors after the 5th year of the date of issue of the Bond. Repayments will be done on the next interest payment date.

Multiple joint holders and nominees permitted:

The sovereign gold bond offers multiple joint holders and nominees to the investors.

Bonds traded on the stock exchange:

Bonds held in demat form will be eligible to be traded on the stock exchanges

Mode of payment

Cash, demand draft, cheques or internet banking are acceptable modes of payment for the sovereign gold bond scheme, India. However, cash is only accepted up to Rs. 20,000.

Eligibility for Investment:

  • The Bonds under this Scheme may be held by a person resident in India, being an individual, in his capacity as such individual, or on behalf of minor child, or jointly with any other individual. The bond may also be held by a Trust, HUFs, Charitable Institution and University. “Person resident in India” is defined under clause (v) of section 2 of the Foreign Exchange Management Act, 1999 (42 of 1999).

Form of Security

  • The Bonds shall be issued by Reserve Bank of India on behalf of the Government of India in the form of Government of India Stock in accordance with section 3 of the Government Securities Act, 2006. The investors will be issued a Holding Certificate (Form C). The Bonds shall be eligible for conversion into de-mat form.

Applications

  • Application forms from investors will be received at branches during normal banking hours on the weeks of subscription. Subscription for the Bonds may be made in the prescribed application form (Form ‘A’) or in any other form as near as thereto, stating clearly the grams of gold and the full name and address of the applicant. The Branches need to ensure that the application is complete in all respects as incomplete applications are liable to be rejected. Every application must be accompanied by the ‘PAN details’ issued by the Income Tax Department to the investor(s). The Branch shall issue an acknowledgment receipt in Form ‘B’ to the applicant. The Branches may guide the investors to apply online, in the interest of better customer service.

Date of Issue

  • The date of issuance shall be as per the details given above.

Denomination

The Bonds shall be denominated in units of one gram of gold or multiples thereof. Minimum investment in the Bonds shall be one gram with a maximum limit of subscription per fiscal year (April - March) of 4 kg for individuals, 4 kg for Hindu Undivided Family (HUF) and 20 kg for trusts and similar entities notified by the Government from time to time ( a self declaration to this effect will be obtained) provided that:

  • in case of joint holding, the above limits shall 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; and
  • the ceiling on investment will not include the holdings as collateral by banks and other Financial Institutions.

Issue Price

  • The issue price for SGB-Series-2020-21-Series IV is Rs. 4,852/- per Gram and GOI in consultation with RBI has decided to offer a discount of Rs. 50/- per gram less than the nominal value for the investors applying online. For such investors, the issue price will be Rs. 4,802/- per gram.

Interest

  • The Bonds shall bear interest from the date of issue at the rate of 2.50 percent (fixed rate) per annum on the nominal value. Interest shall be paid in half-yearly rests and the last interest shall be payable along with principal on maturity.

Receiving Offices

  • Scheduled Commercial Banks (excluding RRBs, Small Finance Banks and Payment Banks), designated Post Offices (as may be notified), Stock Holding Corporation of India Ltd (SHCIL) and recognized stock exchanges viz., National Stock Exchange of India Limited and Bombay Stock Exchange Ltd. are authorized to receive applications for the Bonds either directly or through agents.

Payment Options

  • Payment shall be accepted in Indian Rupees through cash* up to a maximum of Rs. 20,000/- or Demand Drafts* or Cheque or Electronic banking*. Where payment is made through cheque or demand draft, the same shall be drawn in favour of the Branch.

Redemption

  • i) The Bonds shall be repayable on the expiration of eight years from the date of issue of the Bonds. Pre-mature redemption of the Bond is permitted after fifth year of the date of issue of the Bonds and such repayments shall be made on the next interest payment date.
  • ii) The redemption price shall be fixed in Indian Rupees and the redemption price shall be based on simple average of closing price of gold of 999 purity of the previous 3 working days, published by the India Bullion and Jewelers Association Limited.

Repayment

  • RBI/depository shall inform the investor about the date of maturity of the Bond one month before its maturity.

Eligibility for Statutory Liquidity Ratio (SLR)

  • Bonds acquired by the banks through the process of invoking lien/hypothecation/pledge alone shall be counted towards Statutory Liquidity Ratio.

Loan against Bonds (Collateral)**

    • The Bonds may be used as collateral for loans. The Loan to Value ratio will be as applicable to ordinary gold loan mandated by the RBI from time to time. The lien on the Bonds shall be marked appropriately in E-kuber portal by the Bank/Depository.

*The loan against SGBs would be subject to decision of the lending bank/institution, and cannot be inferred as a matter of right by the SGB holder.

Tax Treatment

  • Interest on the Bonds shall be taxable as per the provisions of the Income-tax Act, 1961 (43 of 1961). The capital gains tax arising on redemption of SGB to an individual has been exempted. The indexation benefits will be provided to long term capital gains arising to any person on transfer of bond.

Joint Holding and Nomination

  • Multiple joint holders and nominees (of first holder) are permitted. In case of joint holding, the investment limit of -4- KG will be applied to the first applicant only. Necessary details may be obtained from the applicants as per practice. Nomination of and its cancellation shall be made in Form ‘D’ and Form ‘E’, respectively, in accordance with the provisions of the Government Securities Act, 2006 (38 of 2006) and the Government Securities Regulations, 2007, published in part III, Section 4 of the Gazette of India dated December 1, 2007. An individual Non - resident Indian may get the security transferred in his name on account of he/she being a nominee of a deceased investor provided that:
    i. the Non-Resident investor shall need to hold the security till early redemption or till maturity; and
    ii. the interest and maturity proceeds of the investment shall not be repatriable

Transferability

  • The Bonds issued in the form of Stock Certificate shall be transferable by execution of an Instrument of transfer as in Form ‘F’, in accordance with the provisions of the Government Securities Act, 2006 (38 of 2006) and the Government Securities Regulations, 2007, published in part III, Section 4 of the Gazette of India dated December 1, 2007.

Tradability of bonds

  • The Bonds shall be eligible for trading on a date as may be notified by the Reserve Bank of India. It may be noted that only bonds held in demat form with depositories can be traded in stock exchange.

Agency arrangement and Commission for mobilizing subscription

  • Banks may engage NBFCs, NSC agents and others to collect application forms on their behalf. Banks may enter into arrangements or tie-ups with such entities. Commission for distribution/mobilizing subscription shall be paid at the rate of Rupee one per hundred of the total subscription received by the branches on the applications received and shall share at least 50% of the commission so received with the agents or sub-agents for the business procured through them.

Know-Your-Customer (KYC) requirements

  • Every application must be accompanied by the ‘PAN details’ issued by the Income Tax Department to the investors (individuals and other entities). KYC Documents such as Voter ID, Aadhaar Card/PAN or TAN/Passport will be required. It may be ascertained from the investor, if he/she has made a previous investment in SGBs or IINSC-C and hence in possession of an Investor ID. If so, the investments may be made under the unique Investor ID only.

Cancellation

  • Cancellation of application is permitted till the closure of the issue, i.e. until Friday of the particular week of subscription. Part cancellation of submitted request for purchase of gold bonds is not permitted.

Lien marking

  • As the bonds are government securities, lien marking, etc. will be as per the extant legal provisions of Government Securities Act, 2006 and rules framed there under. The lien shall be marked by our Link Cell, Nagpur/Public Debt Offices of RBI in case of financing by agencies other than the Branches.

Processing through RBI’s e-Kuber system

  • Sovereign Gold Bonds will be available for subscription at the Branches through RBI’s e- Kuber system. The e-Kuber system can be accessed either through INFINET or Internet. Our Link Cell, Nagpur need to enter the data or carry out bulk upload for the subscriptions received by them. They may ensure accuracy of entry of data to prevent occurrence of any inadvertent errors. An immediate confirmation will be provided to them for receipt of application. In addition, a confirmation scroll will be provided for file uploads to enable our Link Cell, Nagpur to update their database. On the date of allotment, Certificates of Holding will be generated for all the subscriptions in the name of the sole/principal holder. Our Link Cell, Nagpur can download the same and take printouts. The Certificates of Holding will also be sent through e-mail to the investors who have provided their email address. The securities will be credited in their de-mat accounts by the depositories in due course subject to matching of particulars furnished in the application with the depositories’ records.

Printing Certificates of Holding

  • Holding Certificate needs to be printed in colour on A4 size 100 GSM paper.

Servicing and follow up

  • Branches will “own” the customer and provide necessary services with regards to this bond e.g. update contact details, receive requests for premature encashment, etc. Branches will be required to preserve applications till the bonds are matured and are repaid.

All other terms and conditions specified in the notification of Government of India in the Ministry of Finance (Department of Economic Affairs) vide number F. No.4(2) W&M/2018, dated 27th March 2018 shall apply to the Bonds.

All Branches in India are authorized to issue Bonds.

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