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 Bonds 2016-17 –
Government of India has, vide
its Notification F.No. 4(7)-W&M/2016
dated August 29, 2016, announced that the Sovereign Gold Bonds 2016
– Series II (“the Bonds”) will be open for subscription from September 01,
2016 to September 09, 2016. 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, 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, 1999
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
September 23, 2016.
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 five
hundred gram per person per fiscal year (April – March).
5. Issue Price
Price 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 Jewellers Association
Limited for the week (Monday to Friday) preceding the subscription period.
The Bonds shall bear interest at
the rate of 2.75 percent (fixed rate) per annum on the amount of initial
investment. Interest shall be paid in half-yearly rests and the last
interest shall be payable on maturity along with the principal.
7. Receiving Offices
Scheduled commercial 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
Limited 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 Rs.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 September 23, 2016, the date of issue
of Gold 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 on the basis of the previous week’s (Monday –
Friday) simple average closing price for gold of 999 purity, published by
iii) The Receiving Office shall
inform the investor of the date of maturity of the Gold Bond one month
before its maturity.
The Receiving Office shall
inform the investor of the date of maturity of the Bond one month before
11. Eligibility for Statutory
Liquidity Ratio (SLR)
Investment in the Bonds shall be
eligible for SLR.
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.
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,
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 within 15 days of issuance on a date notified by the Reserve Bank
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(13) W&M/2008, dated 8th
October 2008 shall apply to the Bonds.
20. Operational guidelines relating to Sovereign Gold
Bonds 2016-17 – Series II are issued vide circular
Encls.: As above.