News | Fixed Income

Sovereign Gold Bond: Latest SGB tranche opens for subscription today, check issue price, other details

MAS Team 06 March 2023
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The Series IV subscription period for the Reserve Bank of India's (2022–23) Sovereign Gold Bond Program is now open. SGB tranche's subscription period began on March 6 and will end on March 10, 2023.
 
SGB issue price
 
According to a press release from the RBI, the latest SGB tranche's issue price was set at Rs5,611 per gram. The RBI had set the issue price for the prior tranche at Rs5,409 per gram. 
SGB discount
 
It should be noted that investors are qualified for a Rs50 per gram discount if they submit their applications online and pay for their investments online. The issuing price of a gold bond for these investors will be Rs5,561/- .
 
How issue price is calculated
 
Based on the simple average of closing prices [published by the India Bullion and Jewellers Association Ltd (IBJA)] for gold of 999 purity for the last three working days of the week prior to the subscription period, i.e. March 01, March 02, and March 03, 2023, the nominal value of the bond is equal to Rs5,611/- per gram of gold. 
 
What is Sovereign Gold Bond (SGB)?
 
Government securities called SGBs are denominated in grams of gold. They serve as alternatives for physical gold. Upon maturity, the bonds will be redeemed in cash, and investors are required to pay the issue price in cash. The Reserve Bank of India issued the bond on behalf of the Indian government. 
 
Important FAQs on SGB as per the ICICI Bank website.
 
What is the rate of interest and how will the interest be paid?
 
The RBI will notify the interest and price at the time of issue. The investor's bank account will get interest credits twice a year, and the last interest payment will be due at maturity along with the principal.
 
Can I buy 4Kg worth of SGB every year?
 
Yes. Because the ceiling has been fixed on an fiscal year (April to March) basis, an individual may purchase 4Kg of gold each year.
 
Are there any risks in investing in SGBs?
 
If the market price of gold falls, there may be a possibility of capital loss. However, the investor does not lose in terms of the units of gold which he has paid for.
 
Is tax deducted at source (TDS) applicable on the bond?
 
The bond is exempt from TDS. Howeever, it is the bond holder's responsibility to abide by the tax regulations.
 
Can a Minor invest in SGB?
 
Yes. The application on behalf of the minor can be made by his / her guardian through a branch. Minor account holders cannot apply for SGB in the online mode.
 
Can I buy 4Kg in the name of each of my family members?
 
Yes, each family member can hold the bond if they satisfy the eligibility criteria for investing in Sovereign Gold Bond.
 
Is the maximum limit of 4 Kg applicable in case of joint holding?
 
In the event of a joint holding for the particular application, the maximum limit will be applicable to the first applicant.

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25th Sept 2020
 
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