GOVERNMENT OF INDIA TO ISSUE SOVEREIGN GOLD BONDS THROUGH DEPARTMENT OF POST
Goverment of India to Issue Sovereign Gold Bonds W.e.f. 26th November,2015
Bonds To Be Sold Through All Head Post Offices in India
Government of India, in consultation with Reserve Bank of India
(RBI), has decided to issue Sovereign Gold Bonds. The Bonds will be issued on November
26, 2015. Applications for the bond will be accepted from November 05, 2015 to
November 20, 2015. The Bonds will be sold through banks and designated post
offices as may be notified. The borrowing through issuance of the Bond will
form part of market borrowing programme of Government of India.
It may be recalled that the Finance Minister had announced in
Union Budget 2015-16 about developing a financial asset, Sovereign Gold Bond,
as an alternative to purchasing metal gold.
The Major Features Of The Bond Are Given Below:
The Major Features Of The Bond Are Given Below:
Sl.
No.
|
Item
|
Details
|
1
|
Product name
|
Sovereign
Gold Bond
|
2
|
Issuance
|
To be
issued by Reserve Bank India on behalf of the Government of India.
|
3
|
Eligibility
|
The
Bonds will be restricted for sale to resident Indian entities including
individuals, HUFs, trusts, Universities, charitable institutions.
|
4
|
Denomination
|
The
Bonds will be denominated in multiples of gram(s) of gold with a basic
unit of 1 gram.
|
5
|
Tenor
|
The
tenor of the Bond will be for a period of 8 years with exit option from 5th year
to be exercised on the interest payment dates.
|
6
|
Minimum size
|
Minimum
permissible investment will be 2 units (i.e. 2 grams of gold).
|
7
|
Maximum limit
|
The
maximum amount subscribed by an entity will not be more than 500 grams per
person per fiscal year (April-March). A self-declaration to this effect will
be obtained.
|
8
|
Joint holder
|
In
case of joint holding, the investment limit of 500 grams will be applied to
the first applicant only.
|
9
|
Frequency
|
The
Bonds will be issued in tranches. Each tranche will be kept open for a period
to be notified. The issuance date will also be specified in the notification.
|
10
|
Issue price
|
Price
of Bond will be fixed in Indian Rupees on the basis of the previous week’s
(Monday–Friday) simple average of closing price of gold of 999 purity
published by the India Bullion and Jewellers Association Ltd. (IBJA).
|
11
|
Payment option
|
Payment
for the Bonds will be through electronic funds transfer/cash payment/ cheque/
demand draft.
|
12
|
Issuance form
|
Government
of India Stock under GS Act, 2006. The investors will be issued a
Stock/Holding Certificate. The Bonds are eligible for conversion into demat
form.
|
13
|
Redemption price
|
The
redemption price will be in Indian Rupees based on previous week’s
(Monday-Friday) simple average of closing price of gold of 999 purity
published by IBJA.
|
14
|
Sales channel
|
Bonds
will be sold through banks and designated Post Offices, as may be notified,
either directly or through agents.
|
15
|
Interest rate
|
The
investors will be compensated at a fixed rate of 2.75 per cent per annum
payable semi-annually on the initial value of investment.
|
16
|
Collateral
|
Bonds
can be used as collateral for loans. The loan-to-value (LTV) ratio is to be
set equal to ordinary gold loan mandated by the Reserve Bank from time to
time.
|
17
|
KYC Documentation
|
Know-your-customer
(KYC) norms will be the same as that for purchase of physical gold. KYC
documents such as Voter ID, Aadhaar card/PAN or TAN /Passport will be
required.
|
18
|
Tax treatment
|
The
interest on Gold Bonds shall be taxable as per the provision of Income Tax
Act, 1961 (43 of 1961) and the capital gains tax shall also remain same as in
the case of physical gold.
|
19
|
Tradability
|
Bonds
will be tradable on exchanges/NDS-OM from a date to be notified by RBI.
|
20
|
SLR eligibility
|
The Bonds will be eligible for Statutory Liquidity
Ratio.
|
21
|
Commission
|
Commission for distribution shall be paid at the
rate of 1% of the subscription amount.
|
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