What are Sovereign Gold Bonds?

Sovereign Gold Bonds (SGBs) are government securities denominated in grams of gold. They are substitutes for holding physical gold. It is one of the preferred investment options for investors looking for secure investment.

SGBs are issued in multiples of one gram of gold where the investors will obtain a holding certificate for it. Also, they are easily convertible into demat form.

Who issues these Bonds?

The Sovereign Gold Bonds (SGBs) is issued by the Reserve Bank on behalf of the Government of India. They are tradable on Stock exchange.

Sovereign Gold Bonds Scheme – Quick Facts

sovereign gold bond scheme

There are no heavy designing charges levied therein. Furthermore, the interest can be earned on sovereign gold bonds, unlike physical gold which usually lies as an idle investment. Sovereign gold bond scheme can diversify your portfolio.
The wise investors keep themselves updated about the sovereign gold bond upcoming issues for the potential investments. You can keep exploring BondsIndia to stay abreast of others.

  • KYC Documentation
    You must adhere to the norms of KYC (Know-your-customer) when you purchase physical gold. The KYC details must get completed upon submitting the identity proof copies such as PAN Card and address proof such as driving license, passport, Voters ID card for verification purposes.
  • Tax Treatment
    The taxation for Sovereign Gold Bonds is upon interest applicable as per the provisions of the Income Tax Act, 1961. In the context of SGB redemption, the capital gains tax levied on an individual is exempted. Also, long-term capital gains attract indexation benefits to an investor or when the bond is transferred from one person to another.
  • Additional Income
    You can earn an assured annual interest at the rate of 2.50% on the issue price which determines the latest fixed rate.
  • Statutory Liquidity Ratio Eligibility
    If banks have procured bonds after undertaking the procedure of invoking lien, pledging, or hypothecation, then they are eligible for statutory liquidity ratio. Normally, the commercial banks maintain capital in the form of gold, cash, approved securities before giving credit to the customers which are known as statutory liquidity ratio.
  • Redemption Price
    The redemption price must be in rupees, subject to an average of the closing price of gold (which determines 999 purity) in the previous three working days.
  • Sales Channel
    The bonds are sold off by the government through banks, Stock Holding Corporation of India Limited (SHCIL), and stipulated post offices as informed. The SGBs are traded via recognised stock exchanges such as BSE or NSE directly or through intermediaries.
  • Commission
    1% of the total subscription amount is levied by the receiving offices as commission for the bond’s distribution. From this commission, they will share half amount with the intermediaries such as brokers or agents.

Features of Sovereign Gold Bonds

Features sovereign gold bonds
  • Eligibility Criteria
    SGBs are eligible to issue to any Indian resident such as individuals, HUFs, trusts, charitable institutions, and universities. Individuals can also invest on behalf of a minor.
  • Free from storage risk and cost
    It eliminates storage risk and cost. They are free from making charges and fear of impurities.
  • Maximum Investment
    An individual investor(trust) can buy 4 kg (20kg) of gold every year as the ceiling has been fixed on a fiscal year (April-March) basis. The sovereign gold bond price varies depending on different factors.
  • Tenure
    SGBs have a maturity period of 8 years. However, the investor can exit the bond from the 5th year (only on the date of interest pay-out). The amount of investment also depends on the current sovereign gold bond price.
  • Interest Rate
    The applicable interest rate for SGB currently is 2.50% per annum on your initial investment. The interest payments are paid semi-annually i.e., twice a year. However, the returns are associated with the current market price of gold.

Why invest in Sovereign Gold Bonds?

invest sovereign gold bonds

Sovereign Gold Bonds provides investors many advantages and are a dependable source for safe investments. It can become a source of additional income for you. Consider the sovereign gold bonds returns for a better investment decision.

Also, investment in Sovereign Gold Bonds is easy and free from worries. You can explore BondsIndia for the information on trending and tradable bonds online. You can seek our Expert Advice if you are confused knowing about the sovereign gold bonds returns in the bond market.


Advantages of Sovereign Gold Bonds


Advantages of Sovereign Gold Bonds

Indexation Benefit

Long-term capital gains accrue when investors transfer bonds which are eligible for indexation benefits. There is also a sovereign guarantee on the principal along with the earned interest.


Sovereign gold bonds are accepted by some banks as a means of collateral security against loans pledged in Demat form. However, it will have a preference like a gold loan after adjusting the loan-to-value (LTV) ratio to the value of gold. The India Bullion and Jewellers Association Limited ascertain this.


Sovereign gold bonds are traded on stock exchanges within a specified date and that is done as per the discretion of the issuer. For example, after 5 years of completion, SGBs can be traded on BSE or NSE, like others.

Who should invest in SGBs?

SGBs are preferred by low-risk taking investors who want to diversify their portfolio with at least 5-10% in gold. The buying and selling expenses in the SGB are also nominal as compared to the physical gold.

Those investors who do not want to go through the fuss of storing physical gold can also choose SGBs. Simply because, it is easier to store in the Demat form, and it cannot be stolen as they are held in electronic form.

Investment in Bonds can be made using online platforms known to provide a secure investment option.

BondsIndia brings to you the dedicated online platform and is a professional bond platform. You can browse different pages for detailed information and informed decision of investing in bonds.

If you do not have your account on BondsIndia and want to access bonds,

Frequently Asked Questions

There are some considerable benefits of investing in Sovereign Gold Bonds. It is a safe investment and provides assured annual interest. No physical gold handling and tax benefits.

Sovereign gold bonds have the maturity period of 8 years. Investors have the option to exit the bonds from fifth year but only on the pay-out dates of interest.

Investors get the advantage of complete safety as Sovereign Gold Bonds don’t pose any risks that are related to physical gold, except the market risks.

Redemption of sovereign gold bond on maturity is an easy process. Submit request for the redemption to the concerned bank, post office, or to the agent at least a day prior of the payment date.

Sovereign gold bonds (SGBs) provide investors the benefit of owning gold and earning 2.50 percent annual interest on it. The interest is paid twice a year.

No, investors cannot convert sovereign gold bonds to physical bonds.

Easy navigation, user-friendly, search-friendly, detailed research, information about bonds and a hassle-free approach have made BondsIndia the trusted online platform for the investors.

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