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August 2020
Sovereign Gold Bond
Benefits of Sovereign Gold Bond
Sovereign gold bonds are issued by RBI on behalf of the Govt. of India and thus theSGB carry a sovereign guarantee on payment of interest and repayment of principalon maturity.
Unique features of Sovereign gold bond are:
SGB provides an opportunity to earn additional fixed interest rate of 2.5%(per annum payable semi-annually) along with capital appreciation of gold.Redemption is linked to Gold Price.
Eliminates the risk of keeping physical gold in custody.
Liquidity feature – Bonds are tradable on exchange and has exit optionsafter 5 years.
Exempt from Capital gains tax, if held till maturity
Convenience of investing online
SGB is attractive to investors as it reduces the costs and risks associated with physicalstorage of gold and pays a nominal interest on the investment.
Sovereign Gold Bond - Summary
Sovereign Gold Bonds 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 Reserve Bank of India on behalf of Government of India.
Product Features:
Issuer : Reserve Bank Of India
Interest : 2.5% p.a. Payable semi-annually.
Tenure : 8 years with exit option after 5 years
on interest payment date
Investment : Minimum 1 Gram, Maximum 4Kg for Individual
& HUF, 20Kg for Trust & other institutions
Eligibility : Residence Individuals, HUFs, Trust, Universities & Charitable institutions
Why to invest in SGB?:
2.5% assured annual interest
Guaranteed by Government of India
Zero risk of handling Physical Gold
Assurance of Purity
Tradable on NSE / BSE
Can be used as collateral for Loan
No Capital Gain Tax if held till maturity
No maintenance charges.
Sr No Tranche Date of Subscription Date of Issuance
2 2020 - 2021 Series IV July 06-10, 2020 July 14, 2020
3 2020 - 2021 Series V August 03-07, 2020 August 11, 2020
4 2020 - 2021 Series VI August 31-September 04, 2020 September 08, 2020
Calendar for FY 2020-2021
Features of Sovereign Gold Bond
Item Details
Issuance Issued by Reserve Bank India on behalf of the Government of India.
TenorThe tenor of the Bond will be for a period of 8 years with exit option in 5th, 6th and 7th year,
to be exercised on the interest payment dates.
Maximum limit 4 KG for Individual and HUF, 20 KG for Trusts – every financial year (April to March)
Interest rate Fixed rate of 2.50% per annum payable semi-annually on the nominal value.
Issue price
Price of Bond will be fixed in INR on the basis of simple average of closing price of gold of
999 purity published by the India Bullion & Jewellers Association Ltd for the last 3 working
days of the week preceding the subscription period.
Redemption priceThe redemption price will be in INR based on simple average of closing price of gold of 999
purity of previous 3 working days published by IBJA.
Interest RateInvestors will be paid a fixed rate of 2.5% per annum payable semi-annually on the nominal
value.
Issuance form
Issued as Government of India Stocks under GS Act, 2006.
The investors will be issued a Holding Certificate for the same. The Bonds are eligible for
conversion into demat form.
TradabilityBonds will be tradable on stock exchanges within a fortnight of the issuance on a date as
notified by the RBI.
Advantage of SGB v/s Physical Gold v/s Gold ETF
Parameters Physical Gold Gold ETF / Funds Sovereign Gold Bond
Safety Risk of handling physical gold High High
Purity of GoldPurity of Gold would depend on
source of purchase
High as it is
in Electronic Form
High as it is
in Electronic Form
Interest Income No No2.5% p.a. payable semi
annually
Capital Gain Tax
Marginal tax rate before 3 years &
LTCG 20% with indexation benefit
after 3 years
Marginal tax rate before 3
years & LTCG 20% with
indexation benefit after 3 years
Marginal tax rate before 3
years & LTCG 20% with
indexation benefit after 3 years
No LTCG on Maturity( 8th year)
Tradability / Exit Route Conditional Tradable on Exchange
Tradable on Exchange.
Redemption- 5th year onwards
with GOI
Storage Cost High Very Low Very Low
Collateral against Loan Yes No Yes
Invested throughBanks, Jewellers, MMTC (GoI
undertaking)
ETF – Broking account
Funds – Offline / Online Mode
Primary issuances on bi-
monthly basis – through NSE
In Secondary market – on
Exchange
Products -Kotak Gold ETF
Reliance Gold BeES
SGB scheme as announced by
RBI
Disclaimer
Motilal Oswal Financial Services Limited (MOFSL)* Member of NSE, BSE, MCX, NCDEX CIN No.: L67190MH2005PLC153397.
Registered Office Address: Motilal Oswal Tower, Rahimtullah Sayani Road, Opposite Parel ST Depot, Prabhadevi, Mumbai-400025; Tel No.: 022-71934263;
Website www.motilaloswal.com. Correspondence Office Address: Palm Spring Centre, 2nd Floor, Palm Court Complex, New Link Road, Malad (West), Mumbai- 400 064. Tel No: 022
7188 1000. Registration Nos.: Motilal Oswal Financial Services Limited (MOFSL)*: INZ000158836. (BSE/NSE/MCX/NCDEX); CDSL and NSDL: IN-DP-16-2015; Research Analyst:
INH000000412. AMFI: ARN - 146822; Investment Adviser: INA000007100; Insurance Corporate Agent: CA0579. Motilal Oswal Asset Management Company Ltd. (MOAMC): PMS
(Registration No.: INP000000670); PMS and Mutual Funds are offered through MOAMC which is group company of MOFSL. Motilal Oswal Wealth Management Ltd. (MOWML): PMS
(Registration No.: INP000004409) is offered through MOWML, which is a group company of MOFSL. • Motilal Oswal Financial Services Limited is a distributor of Mutual Funds, PMS,
Fixed Deposit, Bond, NCDs, Insurance Products and IPOs. • Real Estate is offered through Motilal Oswal Real Estate Investment Advisors II Pvt. Ltd. which is a group company of
MOFSL. • Private Equity is offered through Motilal Oswal Private Equity Investment Advisors Pvt. Ltd which is a group company of MOFSL. • Research & Advisory services is backed
by proper research. Please read the Risk Disclosure Document prescribed by the Stock Exchanges carefully before investing. There is no assurance or guarantee of the returns. PMS is
not offered in Commodity Derivatives segment. Details of Compliance Officer: Name: Neeraj Agarwal, Email ID: [email protected], Contact No.:022-71881085. *MOSL has been
amalgamated with Motilal Oswal Financial Services Limited (MOFSL) w.e.f August 21, 2018 pursuant to order dated July 30, 2018 issued by Hon'ble National Company Law Tribunal,
Mumbai Bench. Customer having any query/feedback/ clarification may write to [email protected]. In case of grievances for Securities Broking write
to [email protected], for DP to [email protected]
Investment in securities market are subject to market risks, read all the related documents carefully before investing.
Thank You !
