What is Sovereign Gold Bond (SGB)? 

• 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.
• It is made open for subscription in tranches by RBI in consultation with GOI.
• RBI Notifies the terms and conditions for the sovereign gold bond scheme from time to time.
• Minimum permissible investment will be 1 gram of gold.
• The maximum limit of subscribed shall be 4 Kg for individual, 4 Kg for HUF and 20 Kg for trusts and similar entities per fiscal year.
• In case of joint holding, the investment limit of 4 KG will be applied to the first applicant only.

Why should I buy SGB rather than physical gold and what are its benefits?

• The quantity of gold for which the investor pays is protected, since he receives the ongoing market price at the time of redemption/ premature redemption.
• The SGB offers a superior alternative to holding gold in physical form.
• The risks and costs of storage are eliminated.
• Investors are assured of the market value of gold at the time of maturity and periodical interest.
• SGB is free from issues like making charges and purity in the case of gold in jewellery form.
• The bonds are held in the books of the RBI or in demat form eliminating risk of loss of scrip etc.