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
Gold Bonds 2016-17 – Series III
Government of India has vide its Notification F.No. 4(16)-W&M/2016 dated October 20,
2016 announced that the Sovereign Gold Bonds 2016 – Series III
(“the Bonds”) will be open for subscription from October 24, 2016 to
November 2, 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
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
November 17, 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 grams per person per fiscal year (April-March).
5. Issue Price
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 Jewellers
Association Limited for the week (Monday to Friday) preceding the
subscription period. The issue price shall be Rs. 50 per gram less than the
The Bonds shall bear interest 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
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 are
authorized to receive applications for the Bonds either directly or through
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
Bonds shall be repayable on the expiration of eight years from November 17,
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
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 IBJA.
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, 2007.
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 on a date notified by the Reserve Bank of India.
18. Commission for
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 III are issued vide circular IDMD.CDD.NO.894/14.04.050/2016-17.
Encls.: As above.