- SGBs are government securities denominated in grams of gold. They are a substitute for holding physical gold. Investors have to pay in cash for the issue price, and the bonds will be redeemed in cash on maturity. A Sovereign Gold Bond is demarcated as 24-carat gold.
- Issued by: SGBs are bonds issued by the Reserve Bank of India (RBI) on behalf of the Government of India.
- Tenure: They have a fixed tenure of 8 years with a 5-year lock-in period. After the end of the lock-in period, clients can make a premature redemption on interest payment dates.
- Charges: There are no charges for purchasing SGBs in the primary issue. However, delivery charges will apply if SGBs are bought in the secondary market.
- Trading SGB: All SGBs are listed and can be sold in the secondary market just like stocks. Generally, SGB ‘s are traded at a discount in the secondary market due to their low liquidity. SGBs are linked to the market price of gold.
- Interest: SGB provides interest at the rate of 2.5% per annum on the amount of initial investment. Interest will be credited semi-annually to the bank account of the investor and the last interest will be payable on maturity along with the principal.
INTEREST RATE = 2.5% per annum
INTEREST IS PAID semi-annually directly to the bank account.
LAST INTEREST is paid with the principal amount.
- Visit SGB WEB to know more about SGB.
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