SOVEREIGN GOLD BONDS, 2015-16 – A great investment opportunity [Closes 20th Nov.]

SOVEREIGN GOLD BONDS SCHEME, 2015

NOTIFICATION NO. GSR 827(E)[F.NO..4(19)-W&M/2014], DATED 30-10-2015

In exercise of the powers conferred by clause (iii) of section 3 of the Government Securities Act, 2006 (38 of 2006), the Central Government hereby makes the following Scheme, namely: –

Short title and commencement

1. (1) This scheme may be called the Sovereign Gold Bonds Scheme, 2015.

(2) It shall come into force on the date of its publication in the Official Gazette.

Definition

2. In this Scheme, unless the context otherwise requires, –

(a)

“Form” means a form appended to this Scheme;

(b)

“receiving office” means the offices or branches of Nationalised Banks, Scheduled Private Banks, Scheduled Foreign Banks as specified in Annexure I to this Scheme and designated Post Offices as may be notified;

(c)

“Stock Certificate” means the Gold Bond issued in the form of Government of India Stock in accordance with section 3 of the Government of India Securities Act, 2006.

Eligibility for Investment.

3. (1) The Gold 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.

Explanation.–– For the purposes of this paragraph, –

(i)

the expression “person” shall have the same meaning as defined in clause (u) of section 2 of the Foreign Exchange Management Act, 1999 (42 of 1999);

(ii)

the expression “person resident in India” shall have the same meaning as defined in clause (v) of section 2 of the Foreign Exchange Management Act, 1999 (42 of 1999).

Form of subscription and pricing

4. (1) Subscription shall be in the form of denominated units of one gram of Gold or multiples thereof:

Provided that the minimum limit of subscription in the Bond shall be of two grams and maximum limit of subscription shall be of five hundred grams per person per fiscal year:

Provided further that in case of joint holding, the above limits shall be applicable to the first applicant only.

(2) The issue price of Gold Bonds shall be made in Indian Rupees on the basis of simple average of closing price of gold of 999 purity of previous week (Monday to Friday) published by the India Bullion and Jewelers’ Association Limited.

Procedure for making application for subscription to Gold Bonds.

5.(1) Every Subscriber who is desirous of making subscription to the Gold Bonds shall apply to any receiving office in Form ‘A’ or in any other form as near as thereto, stating clearly the grams of gold and full name and address of the applicant.

(2) Every application shall contain such documents and particular as specified in the instructions contained in the Application Form.

(3) On receipt of an application under sub paragraph 1, the receiving office shall issue an acknowledgment receipt in Form ‘B’, if all requirements of the application are fulfilled.

(4) An incomplete application is liable to be rejected if all requirements of the application are not fulfilled within period specified in paragraph 6.

Date and form of issue of Gold Bonds

6. (1) The Gold Bonds shall be issued on the 26th day of November, 2015 in the form of a Stock Certificate as specified in Form ‘C’.

(2) The Gold Bonds shall be eligible to be converted into De-mat form.

Period of subscription.

7. the Subscription of the Gold Bond under this Scheme shall open on and from the 5th day of November, 2015 and shall closed on the 20st day of November, 2015;

Provided that the Central Government may, with prior notice, close the Scheme before the period specified above.

Interest

8. (1) The interest on the Gold Bonds shall commence from the date of its issue and shall have a fixed rate of interest at 2.75 percent per annum on the amount of initial investment.

(2) The interest shall be payable in half-yearly rests and the last interest shall be payable along with the principal on maturity.

Receiving Offices

9. The receiving office specified in Annexure I shall be authorised to receive applications for the Bonds either directly or through agents.

Payment Options

10. (1) All payments for Gold Bond shall be accepted in Indian Rupees through cash or demand draft or cheque or electronic banking.

(2) Where payment is made through cheque or demand draft, the same shall be drawn in favour of the receiving office.

Redemption

11. (1) The Gold Bond shall be repayable on the expiration of eight years from the 26th November, 2015, the date of the issue of Gold Bonds:

Provided that premature redemption of Gold Bond may be permitted after fifth year from the date of issue of such Gold Bond on the date on which interest is payable.

(2) On maturity, the Gold Bonds shall be redeemed in Indian Rupees and the redemption price shall be based on simple average of closing price of gold of 999 purity of previous week (Monday to Friday) published by the India Bullion and Jewelers’ Association Limited.

(3) The receiving office shall inform the investor of the date of maturity of the Gold Bond one month before its maturity.

Eligibility for Statutory Liquidity Ratio

12. The investment in the Gold Bonds under this Scheme shall be eligible for Statutory Liquidity Ratio.

Loan against Bonds.

13. (1) The Gold Bonds under this Scheme may be used as collateral security for any loan.

(2) The Loan to Value ratio as applicable to any ordinary gold loan mandated by the Reserve Bank of India shall also apply to the Gold Bond under this Scheme.

(3) The lien on the bond shall be marked in the depository by the authorised banks.

Tax Treatment.

14. The interest on the Gold Bond shall be taxable as per the provisions of the Income-tax Act, 1961 (43 of 1961) and the capital gains tax shall also remain the same as in the case of physical gold.

Nomination.

15. 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 the 1st December, 2007.

Transfer of Gold Bonds

16. The Gold Bonds in the form of Stock Certificate is 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 the 1st December, 2007.

Trade of Gold Bonds

17. The Gold Bonds shall be eligible for trading from such date as may be notified by the Reserve Bank of India.

Commission for distribution

18. 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 the 8th October, 2008 shall apply to the Gold Bond issued under this scheme.

Form ‘A’

[See paragraph 5(1)]

 

Form ‘B’

[See Paragraph 5(3)]

 

Form ‘C’

[See paragraph 6 (1)]

 

Form ‘D’

[See paragraph 15]

 

Form ‘E’

[See paragraph 15]

 

Form ‘F’

[See paragraph 16]

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SOVEREIGN GOLD BONDS, 2015-16

CIRCULAR IDMD.CDD.NO.939/14.04.050/2015-16, DATED 30-10-2015

It has been decided by the Government of India, as per their Notification F.No. 4(19)-W&M/2014 dated October 30, 2015, to issue Sovereign Gold Bonds, 2015 (“the Bonds”) with effect from November 05, 2015 to November 20, 2015. 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. “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 de-mat form.

3. Date of Issue

Date of issuance shall be November 26, 2015.

The investors can apply for the Bonds in receiving offices from November 05, 2015 to November 20, 2015. The issuance can be closed by Government of India earlier than November 20, 2015 with a prior notice.

4. Denomination

The Bonds shall be denominated in units of one gram of gold and multiples thereof. Minimum investment in the Bonds shall be 2 grams with a maximum subscription of 500 grams per person per fiscal year (April – March). In case of joint holding, the limit applies to the first applicant.

5. Issue Price

Price of the Bonds 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 the India Bullion and Jewellers Association Ltd. (IBJA).

6. Interest

The Bonds shall bear interest at the rate of 2.75 per cent (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) and designated Post Offices (as may be notified) 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 or Demand Drafts or Cheque or Electronic banking. Cheque or draft should be drawn in favour of the bank / post office (Receiving Office), specified in paragraph 7 above and payable at the place where the applications are tendered.

9. Redemption

(i)

The Bonds shall be repayable on the expiration of eight years from the date of issue. Pre-mature redemption of the Bond is allowed 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.

10. Repayment

The receiving office shall inform the investor of the date of maturity of the Bonds, one month before its maturity.

11. Eligibility for Statutory Liquidity Ratio (SLR)

The 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. Capital gains tax treatment will be the same as that for physical gold.

14. Applications

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.

15. Nomination

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 the 1st December, 2007.

16. Transferability

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 the 1st December, 2007.

17. Tradability in 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 the 8th October, 2008 shall apply to the Bonds.

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SOVEREIGN GOLD BONDS, 2015-16 – OPERATIONAL GUIDELINES

CIRCULAR IDMD.CDD.NO.968/14.04.050/2015-16, DATED 4-11-2015

This has reference to the GoI notification F.No.4(19)-W&M/2014 and RBI circular IDMD.CDD.No.939/14.04.050/2015-16 dated October 30, 2015 on the Sovereign Gold Bonds, 2015-16. FAQs in this regard have been placed on our website (www.rbi.org.in). Operational guidelines with regard to this scheme are given below:

1. Application

Application forms from investors will be received at branches during normal banking hours from November 5 to 20, 2015. Relevant additional details may be obtained from the applicants, where necessary. Receiving offices need to ensure that the application is complete in all respects.

2. Joint holding and nomination

Multiple joint holders and nominees (of first holder) are permitted. Necessary details may be obtained from the applicants as per practice.

3. Interest on application money

Applicants will be paid interest at prevailing savings bank rate from the date of realization of payment to the settlement date, ie. the period for which they are out of funds. In case the applicant’s bank account is not with the receiving bank, the interest has to be credited by electronic fund transfer to the account details provided by the applicant.

4. Cancellation

Cancellation of application is permitted till the closure of the issue, i.e., November 20, 2015. Part cancellation of submitted request for purchase of gold bonds is not permitted. No interest on application money needs to be paid if the application is cancelled.

5. Lien marking

As the bonds are government securities, lien marking, etc. will be as per the extant legal provisions of Government Securities Act, 2006 and rules framed there under.

6. Agency arrangement

Scheduled commercial banks may engage NBFCs, NSC agents and others to collect application forms on their behalf. Banks may enter into arrangements or tie-ups with such entities.

7. Processing through RBI’s e-kuber system

Sovereign Gold Bonds will be available for subscription at the branches of scheduled commercial banks and designated post offices through RBI’s e-kuber system. The e-kuber system can be accessed either through Infinet or Internet. The receiving offices need to enter the data or carry out bulk upload for the subscriptions received by them. An immediate confirmation will be provided to them for receipt of application. In addition, a confirmation scroll will be provided for file uploads to enable the receiving offices to update their database. On the date of allotment, ie., November 26, 2015, Holding Certificates will be generated for all the subscriptions. The receiving offices can download the same and take printouts. The Holding Certificates will also be sent through e-mail to the investors who have provided their email address. For the investors who have specified their demat account details, the securities will be credited in their demat accounts on the allotment date.

8. Printing of Holding Certificate

Holding Certificate needs to be printed in colour on A4 size 100 GSM paper.

9. Servicing and follow up

Receiving offices, ie., branches of the scheduled commercial banks and designated post offices will “own” the customer and provide necessary services with regards to this bond e.g. update contact details, receive requests for premature encashment, etc. Receiving offices will be required to preserve applications till the bonds are matured and are repaid.

10. Contact details

Any queries/clarifications may be e-mailed to the following:

(a)

Sovereign Gold Bond related: e-mail

(b)

IT related: e-mail.

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FREQUENTLY ASKED QUESTIONS ON SOVEREIGN GOLD BONDS SCHEME, 2015

PRESS RELEASE, DATED 30-10-2015

1. What is Sovereign Gold Bond (SGB)? Who is the issuer?

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.

2. Why should I buy SGB rather than physical gold? What are the 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.

3. Are there any risks in investing in SGBs?

There may be a risk of capital loss if the market price of gold declines. However, the investor does not lose in terms of the units of gold which he has paid for.

4. Who is eligible to invest in the SGBs?

Persons resident in India as defined under Foreign Exchange Management Act, 1999 are eligible to invest in SGB. Eligible investors include individuals, HUFs, trusts, universities, charitable institutions, etc.

5. Whether joint holding will be allowed?

Yes, joint holding is allowed.

6. Can a Minor invest in SGB?

Yes. The application on behalf of the minor has to be made by his / her guardian.

7. Where can investors get the application form?

The application form will be provided by the issuing banks/designated Post Offices/agents. It can also be downloaded from the RBI’s website. Banks may also provide online application facility.

8. What are the Know-Your-Customer (KYC) norms?

Know-Your-Customer (KYC) norms will be the same as that for purchase of physical form of gold. Identification documents such as Aadhaar card/PAN or TAN /Passport / Voter ID card will be required. KYC will be done by the issuing banks/Post Offices/agents.

9. What is the minimum and maximum limit for investment?

The Bonds are issued in denominations of one gram of gold and in multiples thereof. Minimum investment in the Bond shall be two grams with a maximum buying limit of 500 grams per person per fiscal year (April – March). In case of joint holding, the limit applies to the first applicant.

10. Can I buy 500 grams in the name of each of my family members?

Yes, each family member can hold the bond if they satisfy the eligibility criteria as defined at Q No.4.

11. Can I buy 500 grams worth of SGB every year?

Yes. One can buy 500 grams worth of gold every year as the ceiling has been fixed on a fiscal year (April-March) basis.

12. Is the limit of 500 grams of gold applicable if I buy on the Exchanges?

The limit of 500 grams per financial year is applicable even if the bond is bought on the exchanges.

13 What is the rate of interest and how will the interest be paid?

The Bonds bear interest at the rate of 2.75 per cent (fixed rate) per annum on the amount of initial investment. Interest will be credited semiannually to the bank account of the investor and the last interest will be payable on maturity along with the principal.

14. Who are the authorized agencies selling the SGBs?

Bonds are sold through scheduled commercial banks and designated Post Offices either directly or through their agents like NBFCs, NSC agents, etc.

15 Is it necessary for me to apply through my bank?

It is not necessary for the customer to apply through the bank where he/she has his/ her account. A customer can apply through another bank or Post Office.

16. If I apply, am I assured of allotment?

If the customer meets the eligibility criteria, produces a valid identification document and remits the application money on time, he/she will receive the allotment.

17. When will the customers be issued Holding Certificate?

The customers will be issued Certificate of Holding on the date of issuance of the SGB. Certificate of Holding can be collected from the issuing banks/Post Offices/agents or obtained directly from RBI on email, if email address is provided in the application form.

18. Can I apply online?

Yes. A customer can apply online through the website of the listed scheduled commercial banks.

19. At what price the bonds are sold?

Price of bond will be fixed in Indian Rupees on the basis of the previous week’s (Monday – Friday) simple average price for gold of 999 purity published by the India Bullion and Jewellers Association Ltd. (IBJA). The issue price will be disseminated by the Reserve Bank of India

20. Will RBI publish the rate of gold applicable every day?

The price of gold for the relevant tranche will be published on RBI website two days before the issue opens.

21. What will I get on redemption?

On maturity, the redemption proceeds will be equivalent to the prevailing market value of grams of gold originally invested in Indian Rupees. The redemption price will be based on simple average of previous week’s (Monday-Friday) price of closing gold price for 999 purity published by the IBJA.

22. How will I get the redemption amount?

Both interest and redemption proceeds will be credited to the bank account furnished by the customer at the time of buying the bond.

23. What are the procedures involved during redemption?

The investor will be advised one month before maturity regarding the ensuing maturity of the bond.

On the date of maturity, the maturity proceeds will be credited to the bank account as per the details on record.

In case there are changes in any details, such as, account number, email ids, then the investor must intimate the bank/PO promptly.

24. Can I encash the bond anytime I want? Is premature redemption allowed?

Though the tenor of the bond is 8 years, early encashment/redemption of the bond is allowed after fifth year from the date of issue on coupon payment dates. The bond will be tradable on Exchanges, if held in demat form. It can also be transferred to any other eligible investor.

25. What do I have to do if I want to exit my investment?

In case of premature redemption, investors can approach the concerned bank/Post Office/agent thirty days before the coupon payment date. Request for premature redemption can only be entertained if the investor approaches the concerned bank/post office at least one day before the coupon payment date. The proceeds will be credited to the customer’s bank account provided at the time of applying for the bond.

26. Can I gift the bonds to a relative or friend on some occasion?

The bond can be gifted/transferable to a relative/friend/anybody who fulfills the eligibility criteria (as mentioned at Q. no. 4). The Bonds shall be transferable in accordance with the provisions of the Government Securities Act 2006 and the Government Securities Regulations 2007 before maturity by execution of an instrument of transfer which is available with the issuing agents.

27. Can I use these securities as collateral for loans?

Yes, these securities are eligible to be used as collateral for loans from banks, financial Institutions and Non-Banking Financial Companies (NBFC). The Loan to Value ratio will be same as applicable to ordinary gold loan mandated by the RBI from time to time.

28. What are the tax implications on i) interest and ii) capital gain?

Interest on the Bonds will be taxable as per the provisions of the Income-tax Act, 1961(43 of 1961). Capital gains tax treatment will be the same as that for physical gold.

29. Is tax deducted at source (TDS) applicable on the bond?

TDS is not applicable on the bond. However, it is the responsibility of the bond holder to comply with the tax laws.

30. Who will provide other customer services to the investors after issuance of the bonds?

The issuing banks/Post Offices/agents through which these securities have been purchased will provide other customer services such as change of address, early redemption, nomination, etc.

31. What are the payment options for investing in the Sovereign Gold Bonds? Payment can be made through cash/cheques/demand draft/electronic fund transfer.

32. Whether nomination facility is available for these investments?

Yes, nomination facility is available as per the provisions of the Government Securities Act 2006 and Government Securities Regulations, 2007. A nomination form is available along with Application form.

33. Is the maximum limit of 500 gms applicable in case of joint holding?

The maximum limit will be applicable for the first applicant in case of a joint holding for the specific application.

34. Are institutions like banks allowed to invest in Sovereign Gold Bonds?

There is no bar on investment by banks in Sovereign Gold Bonds. These will qualify for SLR.

35. Can I get the bonds in demat form? The bonds can be held in demat account.

36. Can I trade these bonds?

The bonds are tradable on stock exchanges from the date to be notified by RBI. The bonds can also be sold and transferred as per provisions of Government Securities Act.

37. Can I get part repayment of these bonds at the time of exercising put option?

Yes, part holdings can be redeemed in multiples of one gm.

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SOVEREIGN GOLD BOND SCHEME, 2015 – NOTIFIED DESIGNATED POST OFFICES FOR SAID SCHEME

NOTIFICATION NO. GSR 834(E) [F.NO.4(19)-W&M/2014], DATED 3-11-2015

In continuation of Notification G.S.R. 827(E), dated the 30th October, 2015 the list of designated post offices for sovereign gold bonds is as under:

“In terms of para 9 readwith para 2 (b) of Sovereign Gold Bonds Scheme, 2015, the following designated post offices are authorized to receive the applications either directly or through agents:

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