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(16)-B(W&M)/2016 dated February 23, 2017 announced
that the Sovereign Gold Bonds 2016 -17– Series IV (“the Bonds”) will be
open for subscription from February 27, 2017 to March 03, 2017. 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
3. Date of Issue
Date of issuance shall be March
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
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 issue price shall be ? 50 per gram less than the nominal value.
The Bonds shall bear interest at
the rate of 2.50 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
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 March 17, 2017, 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 IBJA.
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, 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 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 them.
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 IV are issued vide circular
Encls.: As above