Sovereign Gold Bond Series II Opens Today: Here's All You Need To Know

The Reserve Bank of India (RBI) has announced a new tranche of the Sovereign Gold Bond (SGB) scheme that will open today, i.e. on September 11.

Sovereign Gold Bond Series II Opens Today

business-standard

As per Ministry of Finance's press release, "Sovereign Gold Bonds 2023-24 (Series II) will be opened for subscription during the period September 11-15, 2023 with Settlement date September 20, 2023. The issue price of the Bond during the subscription period shall be Rs. 5,923 (Rupees Five Thousand Nine Hundred Twenty Three only) per gram."

The RBI also announced a discount for online applicants to the scheme. A discount of Rs 50 per gram less than the nominal value will be given to those applying online and making the payment against the application through digital mode. For such investors the issue price of Gold Bond will be Rs. 5,873 (Rupees Five Thousand Eight Hundred Seventy Three only) per gram of gold.

Also Read: 5 'Not So Known' Ways To Add The Glitter Of Gold To Your Portfolio

Ways To Invest In Sovereign Gold Bonds

shutterstock

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, as per the report. 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.

Also Read: Kerala Becomes The First State In The Country To Introduce A Uniform Gold Rate

What Are Sovereign Gold Bonds?

shutterstock

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 2-3 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 8 years, with the facility to avail the exit option in the 5th, 6th and 7th years, on the interest payment dates.

For the latest and more interesting financial news, keep reading Indiatimes Worth. Click here.