The Reserve Bank of India (RBI) is gearing up to issue the final tranche of Sovereign Gold Bonds (SGBs) for the 2023-24 series. This upcoming issue, known as SGB 2023-24 Series IV, will open for subscription on February 12, 2024, and will close on February 16, 2024. Successful applicants will receive their SGBs on February 21, 2024.
While the issue price for Series IV SGBs is yet to be announced, investors who opt for online subscriptions will receive a discount of Rs 50 per gram. The most recent tranche of SGBs issued in December 2023, was priced at Rs 6,199 per gram. For individuals, the minimum investment is one gram, while the maximum subscription limit is 4 kg.
To apply online, investors must furnish their email IDs, which need to be uploaded on the Ekuber portal of RBI along with subscription details. Payments can be made through cash (up to Rs 20,000), demand drafts, cheques, or electronic banking.
The SGBs will be sold through scheduled commercial banks, Stock Holding Corporation of India (SHCIL), Clearing Corporation of India (CCIL), designated post offices, and recognised stock exchanges.
To buy SGBs from your bank’s website, here’s the step-by-step guide you need to follow.
1] Go to your bank’s official website and log in to Netbanking and then navigate to the ‘eServices’ section and click on the ‘Sovereign Gold Bond’ tab.
2] Click ‘Proceed’ if you agree to all terms and conditions given therein.
3] Enter the required details in the given field on the registration form and click on ‘Submit’ to complete the registration.
4] Specify the desired subscription quantity, and provide nominee details.
5] Finally click on ‘Submit’ to finalise your SGB purchase.
Introduced by the Government of India in 2015, SGBs became a unique way for individuals to invest in gold. SGBs offer an annual rate of interest of 2.50 per cent, credited semi-annually to the investor’s bank account, with the final interest payment being made upon maturity.
They help investors avoid concerns related to making charges, storage expenses, and purity concerns associated with physical gold. Upon maturity, these bonds incur no tax on redemption, thus making them an attractive option for long-term investors.
While SGBs have lower liquidity than physical gold, they can be traded on stock exchanges within a fortnight of issuance. The first series of SGBs issued in India from 2015 became mature in 2023-end yielding annual returns of 12.9 per cent. The yellow metal has averaged 11.2 per cent returns in the last 20 years, according to a small case report.
But investors should be aware that SGBs are not immune to market forces and can experience fluctuations, especially during periods of inflation or global economic uncertainty. Critics point out that gold had lost 83 per cent of its international purchasing power between 1980 and 2001, and has not yet reached inflation-adjusted price 43 years later, and just fared better in rupees due to currency depreciation and import duties.
Nevertheless SGB still remain the most tax-efficient way to invest in gold.