Sovereign Gold Bond (SGB)

Sovereign Gold Bond (SGB)





Soverign Gold Bond

Sovereign Gold Bond

Sovereign Gold Bonds are government securities denominated in gold. Instead of buying physical gold, one can buy also buy SGBs. The investor need cash to buy SGBs and redemption of SGBs also takes place in form of cash. The Bond is issue by Reserve Bank of India on behalf of Government of India.

SGB is a better alternative to holding physical gold. There is no issue of purity of gold and making charges. SGBs can be held in demat form also. So we do not need to worry about theft in case of physical gold.


Investor is assured of market value of gold at the time of redemption. Also interest of 2.5% per annum is also given twice a year on the initial purchase value of SGBs… Capital loss happens if the market price of value of gold declines. Even minor can invest in SGBs. The application on behalf of minor has to be made by his/her guardian. Nomination facility is also available.

Bonds are issued in denominations of 1 grams and in multiples thereof. One can buy minimum 1 gram and maximum limit of 500 grams per person per fiscal year. Know-Your-Customers(KYC) norms will be same as that of buying physical gold. Both interest and redemption amount will be credited to bank account provided by customer while purchasing the bond.
The tenor of bond is 8 years although early exit option is provided after 5 years. The bond is tradable on exchanges through demat account. SGBs can be used as collateral for loan from banks, financial institutions and non-banking financial companies. Interest on bond is taxable while capital gain tax is exempted for individual. Part holding can be redeemed in multiples of 1 grams.





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