The Government of India, in consultation with the Reserve Bank of India, has decided to issue fifth tranche of Sovereign Gold Bonds. Applications for the bond will be accepted from September 01, 2016 to September 09, 2016.
The Bonds will be issued on September 23, 2016. The Bonds will be sold through banks, Stock Holding Corporation of India Limited (SHCIL), designated post offices and recognised stock exchanges viz., National Stock Exchange of India Limited and Bombay Stock Exchange.
It may be recalled that Honourable Finance Minister had announced in Union Budget 2015-16 about developing a financial asset, Sovereign Gold Bond, as an alternative to purchasing metal gold.
Accordingly, four tranches of issuances have been undertaken during 2015-16 and 2016-17 (so far). The features of the Bond are given below:
The Government of India, in consultation with the
Reserve Bank of India, has decided to issue fifth tranche of Sovereign Gold
Bonds. Applications for the bond will be accepted from September 01, 2016 to
September 09, 2016. The Bonds will be issued on September 23, 2016.
The Bonds
will be sold through banks, Stock Holding Corporation of India Limited (SHCIL),
designated post offices and recognised stock exchanges viz., National Stock
Exchange of India Limited and Bombay Stock Exchange.
It may be
recalled that Honourable Finance Minister had announced in Union Budget 2015-16
about developing a financial asset, Sovereign Gold Bond, as an alternative to
purchasing metal gold. Accordingly, four tranches of issuances have been
undertaken during 2015-16 and 2016-17 (so far). The features of the Bond are
given below:
1. Product name : Sovereign Gold Bond
2016-17 – Series II
2. Issuance :To be issued by
Reserve Bank India on behalf of the Government of India.
3. Eligibility : The Bonds will be restricted for sale to resident Indian entities
including individuals, HUFs, Trusts, Universities & Charitable
Institutions.
4. Denomination: The Bonds will be denominated
in multiples of gram(s) of gold with a basic unit of 1 gram.
5 Tenor: The tenor of the Bond will be
for a period of 8 years with exit option from 5th year to be exercised on the
interest payment dates.
6 Minimum size : Minimum permissible investment will be 1 gram of gold.
7 Maximum limit: The maximum amount subscribed by an entity
will not be more than 500 grams per person per fiscal year (AprilMarch).
A
self-declaration to this effect will be obtained.
8 Joint holder : In case of joint holding, the investment limit of 500 grams will be
applied to the first applicant only.
9. Issue Price of Bond : Will be fixed in Indian Rupees on the basis of
simple average of closing price of gold of 999 purity published by the India
Bullion and Jewellers Association Limited for the week (Monday to Friday)
preceding the subscription period.
10 Payment option: Payment
for the Bonds will be through cash payment (upto a maximum of Rs. 20,000) or /
demand draft or cheque or / electronic banking.
11 Issuance: form Government of India Stock
under GS Act, 2006. The investors will be issued a Holding Certificate. The
Bonds are eligible for conversion into demat form.
12 Redemption price : The redemption price will be in Indian Rupees
based on previous week’s (Monday-Friday) simple average of closing price of
gold of 999 purity published by IBJA.
13 Sales channel: Bonds will be sold through banks, Stock Holding Corporation of India
Limited (SHCIL), designated post offices (as may be notified) and recognised
stock exchanges viz., National Stock Exchange of India Limited and Bombay Stock
Exchange, either directly or through agents.
14 Interest rate : The investors will be compensated at a fixed rate
of 2.75 per cent per annum payable semi-annually on the initial value of
investment.
15 Collateral : Bonds can be used as collateral for loans. The loan-tovalue (LTV)
ratio is to be set equal to ordinary gold loan mandated by the Reserve Bank
from time to time.
16 KYC Documentation: Know-your-customer (KYC) norms will be the
same as that for purchase of physical gold. KYC documents such as Voter ID,
Aadhaar card/PAN or TAN /Passport will be required.
17 Tax treatment: The interest on Gold Bonds shall be taxable as per the provision of
Income Tax Act, 1961 (43 of 1961). The capital gains tax arising on redemption
of SGB to an individual has been exempted. The indexation benefits will be
provided to long term capital gains arising to any person on transfer of bond
18 Tradability: Bonds will be tradable on stock exchanges/NDS-OM from a date to be
notified by the RBI within 15 days of the issue date i.e. September 23, 2016.
19 SLR eligibility: The Bonds will be eligible for Statutory
Liquidity Ratio purposes.
20 Commission : Commission for distribution of the bond shall be paid at the rate of
1% of the total subscription received by the receiving offices 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.
Government
of India Ministry of Finance Department of Economic Affairs
Budget Division
North Block,
New Delhi- 110001
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