Interested in financial products
CreditMantri
Processing

Introduction

Andhra Bank is a mid sized public sector bank that’s owned by the Government of India. The bank has a number of products and services for the customers to take care of their banking needs in this ever changing and growing world. The Government, as part of its initiative to reduce the country’s dependency on the imports of gold, has introduced Sovereign Gold Bonds that are a financial asset as an alternative to the conventional ways to buying gold.

Features and Benefits of the Scheme

Andhra Bank Gold Deposit Scheme

The Bank had recently announced the opening of subscription for Sovereign Gold Bonds 2019-2020 Scheme. The scheme is available for subscription at all the branches of the bank across the country and comes with multiple benefits for the investors.

Some of the features and benefits of the Andhra Bank Sovereign Gold Bonds are detailed below.

  • The bonds are issued in the denomination of 1 gram of gold and its multiples. The minimum investment that an eligible investor can make under the scheme is one gram and the maximum investment under the scheme for each fiscal year is
  • 4 kg for individuals 
  • 4 kg for HUF
  • 20 kg for Trusts and similar entities that are notified by the government from time to time.
  • The bonds in all the tranches will be considered while calculating the annual limit, whether they have been subscribed in the initial issuance of the government or purchased in the secondary market.
  • In case of joint holding by the applicants, the given limits will apply only to the first applicant
  • In case of joint holding by the applicants, the given limits will apply only to the first applicant.
  • The scheme offers a discount of Rs. 50 per gram from its issue price if the investors choose to subscribe for the scheme through the online mode.
  • The scheme also offers tenure of 8 years on such gold bonds. Although, the investors can redeem their part holdings before maturity after five years of completion from the date of issue of the bonds.
  • If the investor opts for part redemption, the payment due in such case will be made on the date of subsequent interest payment. The investor has to contact the bank/post office /agent 30 days prior to the payment on the interest date. The bank has the policy to allow the processing of the request for early redemption if the same is received at least one day before the interest payment date. The credit of the proceeds of redemption received will be credited in the bank account provided by the investor at the time of application for the bond.
  • Investors can make payment for the bonds through cheque/ DD/electronic fund transfer.
  • The scheme provides the bonds to be held in physical form or in Demat form.
  • The redemption price will be in Indian Rupees based on previous week's (Monday-Friday) simple average closing price of gold of 999 purity published by the Indian Bullion and Jewellers Association Ltd (IBJA).
  • The investors can trade the bond in open market provided it is held in demat form and the bonds are also transferable to any other eligible investor and also file a nomination under the scheme.
  • These bonds help the investors in eliminating the risk and cost of storage of physical gold.
  • The scheme also assures the investors of the value of their investment in terms of the market value of gold at the time of maturity apart from getting regular income from the interest earned on the bonds.
  • The scheme also eliminates the scope of any additional charges that are involved in purchase of gold in traditional manner like making charges, purity testing charges, etc.

Interest payment of the Scheme

The interest on the Andhra Bank Sovereign Gold bonds is payable at an interest rate of 2.50% (fixed rate) annually on the nominal value of the bonds.

Such interest is paid half yearly as per the guidelines of the Reserve Bank of India with respect to interest on the bonds and it will be credited in the account of the holder that the investor has provided at the time of subscription.

The interest accrued on the bonds is taxable at the hands of the investor under the IT Act, 1961.

According to the scheme, the last interest is paid along with the payment of the principal amount at the time of maturity of these bonds.

Eligibility for the Scheme

The bank does not provide an explicit list of eligible applicants at its website. However, looking at the details of the scheme as hosted on the website of RBI, the eligible applicants for this scheme are the following persons resident in India

  • Individual (either for himself or in the name of a minor or held jointly with another individual)
  • Hindu Undivided Family
  • Trust
  • Charitable Institution
  • University

Documents required for the Scheme

The Reserve Bank of India has mentioned a list of documents that are required for the purpose of this scheme. The details of the same are,

  • Duly filled application ‘Form A’ that can be submitted at the branches during normal working hours on the week of subscription.
  • The form mentions the details like the quantity of the gold in grams, name and address of the applicant.
  • The investor has to submit a completed application in order to be accepted as partial/incomplete applications are out rightly rejected.
  • The application must mandatorily mention the PAN Number of the investor issued by the Income Tax Department.
  • The applicants will receive an acknowledgement receipt in the prescribed FORM B.
  • The investors will be provided with a Certificate of Holding via email id if provided by them or through post office or via email from RBI.
  • Apart from the above list, the bank will also require additional documents in line with the KYC norms of the bank.

FAQs

1. What is the minimum investment that a person can make under the scheme?

The minimum investment required by a person under the scheme is of 1 gram of gold

2. What is the maximum investment that a HUF can make per fiscal year?

The maximum permissible investment that a HUF can make per fiscal year is 4kg including that done at the time of subscription as well as through open market.

3. What is the maximum tenure of the scheme?

the maximum tenure of the scheme is 8 years.

4. What is the rate of interest payable under the scheme?

The rate of interest payable under the scheme is 2.50% (fixed) per annum.

5. What is the minimum lock in period under the scheme?

the minimum lock in period under the scheme is 5 years after which investors can opt for part redemption/premature redemption of bond, the payment of which will be made in the subsequent interest payment date.

×Thank you! Your comment will be reviewed and posted shortly.

CreditMantri will never ask you to make a payment anywhere outside the secure CreditMantri website. DO NOT make payment to any other bank account or wallet or divulge your bank/card details to fraudsters and imposters claiming to be operating on our behalf.