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Bond
Sovereign Gold Bonds
Sovereign Gold Bonds were launched on Thursday 5th November, 2015 as a part of gold monetisation. Sovereign gold bonds offer 2.75 per cent interest to investors to cut physical buying of the precious metal. The Gold monetisation scheme and Sovereign Gold Bonds schemes are aimed to reduce reliance on gold imports, which raise India's current account deficit to damaging extent.
What is Sovereign Gold Bonds?
Sovereign Gold Bonds (SGBs) are Government Securities denominated in grams of gold. They are substitutes for holding physical gold. They are listed in the cash market.
Objective
Need for a Sovereign Gold Bond
  • To reduce the demand for physical gold.
  • Shift part of the estimated 300 tons of physical bars and coins purchased every year for Investment into 'demat' gold bonds.
Sale to Indian entities:
Persons resident in India as defined under Foreign Exchange Management Act, 1999 are eligible to invest in SGB. Eligible investors include individuals, HUFs, trusts, universities, charitable institutions, etc.
Features
The SGB offers a superior alternative to holding gold in physical form. The risks and costs of storage are eliminated. Investors are assured of the market value of gold at the time of maturity and periodical interest. SGB is free from issues like making charges and purity in the case of gold in jewellery form. The bonds are held in the books of the RBI or in demat form eliminating risk of loss of scrip etc. The Bonds bear interest at the rate of 2.75 per cent (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. The Sovereign Gold Bonds will be available both in demat and paper form. The tenure of the bond is for a minimum of 8 years with option to exit in 5th, 6th and 7th years. They will carry sovereign guarantee both on the capital invested and the interest. Bonds can be used as collateral for loans. Bonds would be allowed to be traded on exchanges to allow early exits for investors who may so desire. Further, bonds would be allowed to be traded on exchanges to allow early exits for investors who may so desire. In Sovereign Gold Bonds, capital gains tax treatment will be the same as for physical gold for an 'individual' investor. The department of revenue has said that they will consider indexation benefit if bond is transferred before maturity and complete capital gains tax exemption at the time of redemption.
Trading
The trading in Sovereign Gold Bond shall be inclusive of accrued interest i.e. dirty price. The first tranche of Sovereign Gold Bond (issued on November 30, 2015) shall be available for trading w.e.f. June 13, 2016.
Exchange
NSE:
Segment Capital Market Segment
Market Type Normal (N)
Book Type Regular Lot (RL), Stop Loss (SL)
Symbol of the security To be intimated separately from time to time
Series GB
Market Lot 1 (one unit = one gram)
Order Type Day, Immediate or Cancel (IOC), Market & Limit Order.
Order matching Anonymous order book. Continuous matching with Price – Time priority.
Tick Size Rs 0.01
Eligible Members All members eligible to trade in Capital market segment
Market Timings 09:15 am to 3.30 pm. & 3:40 pm to 4:00 pm (closing session).
BSE:
Segment Equity Segment
Underlying Sovereign Gold Bond Scheme 2015 Tranche One.
Trading hours 09:15 a.m. to 03:30 p.m. and 03:40 p.m. to 04:00 p.m. (post closing)
Trading Session Continuous Trading.
Name of the security (Scrip Id) SGB20151
Scrip Code 800251
Group G
Market Lot 1 unit (1 unit = 1 gram of Gold) and in multiples of 1 thereafter.
Minimum Price Movement (Tick Size) Rs 0.01
The trading of these bonds shall be on dirty price.
Quotation Quotation shall be on dirty price.
Scrip Validity Scrip shall be available for trading till the expiry date of the tranche.
Contract value Quoted Price*Quoted Qty Price Band +/- 10%