Sovereign Gold Bond Scheme 2021: Hurry if you are interested in buying Sovereign Gold Bond (SGB) as today is the last date for subscription of Sovereign Gold Bond Scheme 2021-22 – Series IV or the fourth tranche. The subscription was open from Monday, July 12, 2021 and today, July 16, 2021, is the last day for subscription. The issue price has been fixed at Rs 4807 per gram of gold.
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On July 9, 2021, the Reserve Bank of India (RBI) had issued a notification on the issue price of SGB. The notification stated, “The nominal value of the bond based on the simple average closing price [published by the India Bullion and Jewellers Association Ltd (IBJA)] for gold of 999 purity of the last three business days of the week preceding the subscription period, i.e. July 07, July 08 and July 09, 2021 works out to Rs 4,807 per gram of gold.”
However, the government of India in consultation with the RBI has decided to offer a discount of Rs 50 per gram less than the nominal value to those investors applying online and the payment against the application is made through digital mode. For such investors, the issue price of Gold Bond will be Rs 4,757.
It has to be remembered that SGBs are government securities denominated in grams of gold. They are substitutes for holding physical gold. Investors have to pay the issue price in cash and the bonds will be redeemed in cash on maturity. The bond is issued by the RBI on behalf of the government of India.
Now, there are certain queries in the minds of the people regarding the purchase of SGB. Now, a question frequently asked is that why should one buy SGB instead of physical gold and what are the benefits of it? It is because of the fact that the quantity of gold for which the investor pays is protected, since he receives the ongoing market price at the time of redemption/ premature redemption. 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.
On maturity, the SGBs will be redeemed in Indian rupees and the redemption price will be based on simple average of closing price of gold of 999 purity of previous three business days from the date of repayment, published by the India Bullion and Jewelers Association Limited.