After opening the doors for interested investors to put their money into RBI¡¯s SGBs (Sovereign Gold Bonds) in September this year, the government has again announced new tranches of SGBs that will be launched soon.
Before going into the details of the new tranches of SGBs, let us first understand what sovereign gold bonds are.?
For the unversed, SGBs are government securities denominated in grams of gold, issued by the RBI. They are one of the substitutes for holding physical gold. Simply put, these are RBI-mandated certificates issued against grams of gold, which allow you to invest in gold without the strain of safekeeping the physical form of this asset. SGBs act as a secure investment tool because gold prices are less susceptible to market fluctuations.?
Given that these bonds are issued by the RBI on behalf of the Government of India, a particular window is pre-set for subscription, during which a sovereign gold bond scheme is issued in the name of investors in tranches. Generally, the RBI announces the issuance of the latest sovereign bonds in a press release every two to three months, with a usually an upto one week window during which you can subscribe to this scheme and purchase the SGBs. The payment for SGBs can usually be through cash, demand draft, cheque or electronic banking. The tenure of these bonds is eight years, with the facility to avail the exit option in the 5th, 6th and 7th years, on the interest payment dates.
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The government of India has announced Series III and IV of the Sovereign Gold Bond Scheme 2023-24. The RBI will issue SGBs separately in two tranches, the first one in the next week of December, and the second one in February 2024. You can check the details given below:
Tranche | Date of Subscription | ? Date of Issuance | |
1. | 2023-24 Series III | December 18 - December 22, 2023 | ? December 28, 2023, Thursday |
2. | 2023-24 Series IV | February 12 - February 16, 2024 | ? February 21, 2024, Wednesday |
The subscription of the Gold Bonds under the Scheme shall be open (Monday to Friday) on the dates specified above, provided that the Central Government may, with prior notice, close the scheme at any time before the period specified above, as per RBI.
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Sovereign gold bond scheme 2023-24 series 2 will be sold through banks, Stock Holding Corporation of India Ltd (SHCIL), designated post offices, and recognized stock exchanges ¡ª the National Stock Exchange and the Bombay Stock Exchange.
SGBs provide an annual interest rate of 2.5 percent, biannually, in the months of June and December. SGBs have an eight-year tenure and can also be redeemed prematurely, beginning from the fifth year. However, there is a penalty for early redemption. In the first year of premature redemption, the penalty is one percent of the bond's nominal value, and this decreases to 0.5 percent for each subsequent year.
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