The Chairman & Managing
All Scheduled Commercial Banks,
Designated Post Offices
Stock Holding Corporation of India Ltd.( SHCIL)
National Stock Exchange of India Ltd. & Bombay Stock Exchange Ltd.
Sovereign Gold Bond Scheme
2018-19 Series I
Government of India
has vide its Notification F.No.4(8)-W&M/2018 dated April 13, 2018 announced that the Sovereign Gold Bond Scheme
2018-19 Series -I (“the Bonds”) will be open for subscription from April
16, 2018 to April 20, 2018. The Government of India may, with prior notice,
close the Scheme before the specified period. The terms and conditions of
the issuance of the Bonds shall be as follows:
1. Eligibility for Investment:
The Bonds under this Scheme may
be held by a person resident in India, being an individual, in his capacity
as such individual, or on behalf of minor child, or jointly with any other
individual. The bond may also be held by a Trust, HUFs, Charitable
Institution and University. “Person resident in India” is defined under
section 2(v) read with section 2(u) of the Foreign Exchange Management Act,
2. Form of Security
The Bonds shall be issued in the
form of Government of India Stock in accordance with section 3 of the
Government Securities Act, 2006. The investors will be issued a Holding
Certificate (Form C). The Bonds shall be
eligible for conversion into de-mat form.
3. Date of Issue
Date of issuance shall be May
The Bonds shall be denominated
in units of one gram of gold and multiples thereof. Minimum investment in
the Bonds shall be one gram with a maximum limit of subscription of 4 kg
for individuals, 4 kg for Hindu Undivided Family (HUF) and 20 kg for trusts
and similar entities notified by the government from time to time per
fiscal year (April – March),
case of joint holding, the above limits shall be applicable to the first
ceiling will include bonds subscribed under different tranches during
initial issuance by Government and those purchased from the secondary
ceiling on investment will not include the holdings as collateral by banks
and other Financial Institutions.
5. Issue Price
The nominal value of the Bonds
shall be fixed in Indian Rupees on the basis of simple average of closing
price of gold of 999 purity published by the India Bullion and Jewelers
Association Limited for the last 3 working days of the week preceding the
subscription period. The issue price of the Gold Bonds will be ? 50 per
gram less than the nominal value to those investors applying
online and the payment against the application is made through digital
The Bonds shall bear interest
from the date of issue at the rate of 2.50 percent (fixed rate) per annum
on the nominal value. Interest shall be paid in half-yearly rests and the
last interest shall be payable on maturity along with the principal.
7. Receiving Offices
Banks (excluding RRBs), designated Post Offices (as may be notified),
Stock Holding Corporation of India Ltd (SHCIL) and recognized stock
exchanges viz., National Stock Exchange of
India Limited and Bombay Stock Exchange Ltd. are authorized to
receive applications for the Bonds either directly or through agents.
8. Payment Options
Payment shall be accepted in
Indian Rupees through cash up to a maximum of ? 20,000/- or Demand Drafts
or Cheque or Electronic banking. Where payment is made through cheque or demand
draft, the same shall be drawn in favour of receiving office.
i) The Bonds shall be repayable
on the expiration of eight years from May 04, 2018, the date of issue of
Bonds. Pre-mature redemption of the Bond is permitted from fifth year of
the date of issue on the interest payment dates.
ii) The redemption price shall
be fixed in Indian Rupees and the redemption price shall be based on simple
average of closing price of gold of 999 purity of the previous 3 working
days, published by the India Bullion and Jewelers Association Limited.
RBI/depository shall inform the
investor of the date of maturity of the Bond one month before its maturity.
11. Eligibility for Statutory
Liquidity Ratio (SLR)
Bonds acquired by the banks
through the process of invoking lien/hypothecation/pledge alone shall be
counted towards Statutory Liquidity Ratio.
12. Loan against Bonds
The Bonds may be used as
collateral for loans. The Loan to Value ratio will be as applicable to
ordinary gold loan mandated by the RBI from time to time. The lien on the
Bonds shall be marked in the depository by the authorized banks. The loan
against SGBs would be subject to decision of the bank/financing agency, and
cannot be inferred as a matter of right.
13. Tax Treatment
Interest on the Bonds shall be
taxable as per the provisions of the Income-tax Act, 1961. The capital
gains tax arising on redemption of SGB to an individual has been exempted.
The indexation benefits will be provided to long term capital gains arising
to any person on transfer of bond
Subscription for the Bonds may
be made in the prescribed application form (Form
‘A’) or in any other form as near as thereto stating clearly the
grams of gold and the full name and address of the applicant. The receiving
office shall issue an acknowledgment receipt in Form ‘B’ to the applicant.
Nomination and its cancellation
shall be made in Form ‘D’ and Form ‘E’, respectively,
in accordance with the provisions of the Government Securities Act, 2006
(38 of 2006) and the Government Securities Regulations, 2007, published in
part III, Section 4 of the Gazette of India dated December 1, 2007. An
individual Non - resident Indian may get the security transferred in his
name on account of his being a nominee of a deceased investor provided
Non-Resident investor shall need to hold the security till early redemption
or till maturity; and
interest and maturity proceeds of the investment shall not be repatriable.
The Bonds shall be transferable
by execution of an Instrument of transfer as in Form ‘F’, in accordance with the provisions of
the Government Securities Act, 2006 (38 of 2006) and the Government
Securities Regulations, 2007, published in part III, Section 4 of the
Gazette of India dated December 1, 2007.
17. Tradability of bonds
The Bonds shall be eligible for
trading from such date as may be notified by the Reserve Bank of India.
18. Commission for distribution
Commission for distribution
shall be paid at the rate of Rupee one per hundred of the total
subscription received by the receiving offices on the applications received
and receiving offices shall share at least 50% of the commission so
received with the agents or sub-agents for the business procured through
19. All other terms and
conditions specified in the notification of Government of India in the
Ministry of Finance (Department of Economic Affairs) vide number F. No.4(2)
W&M/2018, dated 27th March 2018 shall apply to the Bonds.
20. Operational guidelines
relating to Sovereign Gold Bonds are issued vide circular IDMD.CDD.No.2652/14.04.050/2017-18 dated April 13, 2018.
Deputy General Manager
Encls.: As above.