Gold has always been a popular investment choice for those looking to safeguard their wealth or diversify their investment portfolio. Sovereign Gold Bonds (SGBs) offer a unique opportunity for individuals to invest in gold. It combines the government’s security along with no making charges or locker charges and assured returns. In this article, we will discuss Sovereign Gold Bonds, eligibility, required documents, how to buy sovereign gold bonds, and much more.
What Are Sovereign Gold Bonds (SGB)?
Sovereign Gold Bonds,or SGBs, arefinancial instruments issued by the Government of India. They are an appropriatealternative to investing in physical gold. The minimum investment is the prevailing price of one gram of gold.
Investors have to pay the issue price for the grams of gold they wish to buy, and upon maturity, they will get the cash value of the SGB in which they have invested. Thematurity price of the SGB per gram of gold is the simple average closing price of gold with 999 purity in the previous three working days.
The bonds come with alock-in period of 8 years; however, one can prematurely redeem the amount after completion of 5 years. Investments in these bonds mitigate several risks associated with physical gold and are a great financial instrument for capital appreciation. Moreover, apart from capital appreciation, they allow you toearn an interest at 2.5% p.a. on the principal investment amount.
Eligibility to Buy Sovereign Gold Bond Online
As per the current Reserve Bank of India (RBI) norms, the following entities are eligible to buy/invest in Sovereign Gold Bonds (SGB):
- Indian residents
- Individuals subscribing on behalf of a minor
- Hindu Undivided Family (HUF)
- Trusts
- Charitable organisations
- Universities
Please note that NRIs, PIOs, OCIs, and entities like Firms, LLPs, and private limited companies are not eligible to buy sovereign gold bonds.
Documents Required To Buy Sovereign Gold Bond Online
Here are the documents required to purchase Sovereign Gold Bonds online:
- KYC documents, including PAN, Aadhaar, passport or voter ID card
- Bank account statement
Sovereign Gold Bond Minimum and Maximum Limit
Theminimuminvestment in SGB isone gram of gold at the prevailing gold rate prescribed by the RBI.
Themaximum SGB investment forindividual investors andHUFs is4 kgof gold. Meanwhile, the maximum limit forcharitable organisations, universities, and trusts is20 kg of gold.
Different Ways to Buy SGBs
There are multiple ways you can buy SGB, which are as follows:
- You can invest in SGBs online by simply logging in to your bank’s internet banking portal.
- You can buy SGBs from your mobile phone by logging in to your bank’s mobile banking application.
- You can invest in SGBs by physically visiting your nearest bank branch or post office.
- You can purchase SGBs directly from the ‘RBI Retail Direct’ website.
- The Stock Holding Corporation of India Limited (SHCIL) allows you to invest in SGBs.
- You can also buy SGBs from any recognised stock exchange, i.e. the National Stock Exchange of India and Bombay Stock Exchange.
How to Buy Sovereign Gold Bond Online?
Here are thesteps to buy Sovereign Gold Bonds online:
Step 1:Log in to your bank’s internet banking/mobile banking account with your credentials.
Step 2:From the home page/screen, click on the ‘eServices’ option and select ‘Sovereign Gold Bonds’.
Step 3:Go through the terms and conditions and agree to it.
Step 4:Fill in the required details, such as quality (number of grams), nominee details, etc., and proceed.
Step 5:Make the payment through your desired mode of payment.
How to Buy Sovereign Gold Bond in Post Office?
Here are thesteps to buy Sovereign Gold Bonds by visiting a designated post office:
Step 1:Physically visit your nearest post office and ask for an application form to invest in Sovereign Gold Bonds.
Step 2:Fill in the application form carefully and submit it along with the required documents.
Step 3:Make the payment by submitting a cheque or demand draft (DD).
Step 4:Once it is verified and accepted, you will get an acknowledgement receipt for your application.
Sovereign Gold Bonds allow investors to participate in the gold market without paying the making charges for gold and the hassle of physical storage. By investing in these instruments, you can diversify your portfolio and capitalise on the rising gold market. There are multiple ways to invest in SGBs. However, applying online from your bank’s net banking or mobile banking is the most convenient and secure way.
