Can I still invest in the Sovereign Gold Bond (SGB) scheme ?

The primary issuance of Sovereign Gold Bond (SGB) by the Reserve Bank of India (RBI) on behalf of the Government of India is done in periodic tranches. However, no new issues have been announced recently. The scheme has been discontinued for fresh subscriptions.

Why was SGB discontinued?

The redemption price of SGBs is based on the average closing price of 999 purity gold (as published by the India Bullion and Jewellers Association Ltd for the preceding three business days).

The current rise in gold prices means that the government has to pay higher amounts to investors at the time of redemption.

For existing bondholders, the scheme remains active for redemption and other related processes.

How to buying Sovereign Gold Bonds from exchanges?

• Investors who wish to purchase SGBs must now do do on the secondary market.

• You need a demat account with a stockbroker to buy SGBs from exchanges.

• National Stock Exchange (NSE): The NSE offers SGBs for trading in demat form.

• Bombay Stock Exchange (BSE): Like the NSE, the BSE also offers SGBs for trading in demat form.

• When you buy SGBs from exchanges, you need to pay brokerage charges to your stockbroker.

SGBs also offer a fixed interest rate of 2.50% per annum, payable semi-annually on the nominal value of the bonds. The interest earned on SGBs is taxable, but there is no tax on the capital gains if the bonds are held until maturity (8 years).

If I buy a Sovereign Gold Bond (SGB) that has an original maturity of eight years, but someone sells it after five years, how long can I hold it?

The bond’s total maturity period is fixed from its original issue date, not from when you purchase it. So, even if you buy it on the secondary market after five years, you can hold it only until the original 8-year maturity is reached ( in this case three years).

SGBs 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 on behalf of Government of India.

When was the last SGB issued?

The last Sovereign Gold Bond (SGB) was issued in February 2024 (2023-24 Series IV) priced at ₹6,263 per gram.