The RBI has officially announced the schedule for the early redemption of SGB issued between May 2017 and May 2020. To offer investors an earlier liquidation option. The Central Bank of India is planning to redeem 30 trenches from October 11, 2024, and February 7, 2025.
The RBI announced the price of Sovereign Gold Bonds based on the average gold prices from the three working days immediately before the maturity date. The investors who hold these bonds will have the option to submit a redemption request that will be open for a 20-days window. Once the request is submitted, the redemption amount, along with total interest payments, will be credited to the investors, Bank A/C, within 10 days.
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What is Sovereign Gold Bonds?
Sovereign gold bonds(SGB) are issued by the RBI on behalf of the Central Government. Sovereign Gold Bonds are government securities valued in grams of gold. Investors purchase these bonds in cash and will receive cash on maturity when the bonds are redeemed.
Sovereign Gold Bonds offer the best alternative to holding sovereign gold in physical form. They will reduce the costs associated with storage. Investors are assured and guaranteed the market value of gold maturity and receive periodic interest payments. Additionally, Sovereign Gold Bonds are free from extra burdens like making charges and purity that are typically associated with gold in jewel form.
Benefits of Sovereign Gold Bonds
Sovereign Gold Bonds are one of the safe and secured bonds available in India. These bonds attract many investors and corporation funds because there is less chance of defaults on repayment. Sovereign Gold Bonds may have some risk of capital loss due to market fluctuations or the price of gold is declining.
Sovereign Gold Bonds give a handsome return if you can hold them for long periods. Investors tend to shift their investment towards sovereign gold bonds due to stock market chaos. We have seen that India imports a huge amount of gold, and when global gold prices increase, the cost of importing gold, along with higher domestic prices, increases.
Sovereign Gold Bonds Minimum investment
Sovereign gold bonds are available in the multiple of (1 gram) of gold. The minimum investment required is one gram, and this is applicable to all types of investors. The maximum limit for investment is as follows.
For Individuals – Maximum investment limit is 4kg of gold per year.
For Hindu undivided Family – Maximum investment limit is 4kg of gold per year.
For trusts and other entities recognised by the government – Maximum investment limit is 20kg of gold per year.
How to buy Sovereign Gold Bonds in Zerodha App
Sovereign Gold Bonds can be traded on both the National Stock Exchange(NSE) and the Bombay Stock Exchange(BSE). If you forget to apply for Sovereign Gold Bonds during primary market issuance, you can invest in the secondary market.
There are a few steps to buying Sovereign Gold Bonds in Zerodha App. Please follow these steps mentioned below:
Step 1- Create a zerodha account.
Step 2- Search for the Sovereign Gold Bonds scrip code <SGB>in your dematerialized account (Demat Account) and place a buy order.
Step 3- Once the order places, the sovereign gold bonds will be credited to your account within T+1 day.
Conclusion
Sovereign Gold Bonds offer a secure and more convenient alternative to holding physical gold, combining the value of gold with the added benefits of periodic interest and there is no storage issue with an easy to purchase and redemption process and also with the backing of the government, these Sovereign Gold Bonds are an attractive option for investors to diversify their stock portfolio without any issue of managing physical gold ownership.