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Introduction

Punjab National Bank’s sovereign gold schemes are designed to offer convenience and act as a reliable investment in gold. PNB offers special gold schemes that help to generate healthy returns on gold. Investors can purchase the yellow metal directly from the bank. PNB is one of the banks that have been authorized to issue Sovereign Gold Bond scheme. The gold scheme bonds are issued by the Reserve Bank of India (RBI) on behalf of the Government of India.

PNB gold scheme bonds are issued only at select branches of the bank, post offices and through agents. PNB also offers loans against gold schemes which is customized to enable investors to opt for a loan to meet their unique financial objectives.

PNB Sovereign Gold Bond 2015 - Features and Benefits

Punjab National Bank Gold Deposit Scheme

Some of the key features of sovereign gold bonds offered by PNB are as follows:

  • Bonds can be bought in denominations of 1 gram of gold and in multiples of 1 thereafter.
  • An investor needs to purchase at least 2 grams of gold.
  • PNB recommends a maximum subscription of 500 grams per person in a single fiscal year. For joint holders, this limit is applicable to the first applicant.
  • The first holder of the bond can opt for nomination facility.
  • Bonds are denominated in Indian Rupees. The price is generally determined based on the previous week’s simple average closing price of gold of 999 purity as published by the Jewellers Association Ltd (IBJA) and the India Bullion.
  • The issue price for Sovereign Gold Bonds 2015 has been fixed at Rs. 2,684.
  • Bonds carry a fixed interest rate of 2.75% p.a. on the initial investment.
  • Interest gets paid in half-yearly instalments. The last instalment is paid to investors at the time of maturity along with the principal amount.
  • The bank allows applications to be cancelled before the closure of the issue.
  • Investors are issued a holding certificate which can be converted into a Demat form.
  • The bond carries an expiration date of 8 years from the date of issue.
  • Investors can redeem the bonds prematurely on interest payment dates starting from the 5th year of the date of issue of the bonds.
  • Interest earned on the bonds is subject to tax as per the provisions of the Income Tax Act 1961 and capital gain tax.

Benefits of PNB Sovereign gold bond 2015 are as follows:

  • PNB Sovereign gold bonds can be used as collateral for loan applications. It is accepted by banks, Non-Banking Financial Companies (NBFC) and financial institutions.
  • The bonds can be transferred or gifted provided the person fulfils the eligibility criteria.
  • Tax is not deducted at source.

PNB Sovereign Gold Bond 2016 - Features and Benefits

Some of the key features of sovereign gold bond 2016 offered by PNB are as follows:

  • Bonds are available in denominations of 1 gram of gold and in multiples of 1 gram thereafter.
  • The price of the bonds is fixed in Indian Rupees. Prices of the bonds are determined based on the previous week’s simple average closing price of gold of 999 purity as published by the Jewellers Association Ltd (IBJA) and the India Bullion.
  • The issue price for the third tranche of the bonds was fixed at Rs. 2,916 per gram.
  • Investors get a holding certificate which can be converted into a Demat form.
  • The bond has an expiration date of 8 years from the date of issue.
  • The bonds can be redeemed prematurely on interest payment dates starting from the 5th year of the date of issue of the bonds.
  • Interest is payable half-yearly at the rate of 2.75% p.a. on the initial value of the investment.
  • Interest earned on the bonds is subject to tax as per the provisions of the Income Tax Act 1961 and capital gain tax.

Key benefits of these bonds are as below:

  • The bonds can be used as collateral for loan applications. It is accepted by banks, Non-Banking Financial Companies (NBFC) and financial institutions.
  • The bonds can be transferred or gifted provided the person fulfils the eligibility criteria.
  • Tax is not deducted at source.
  • Nomination facility is available only to the first holder of the bond.
  • The bonds are eligible for Statutory Liquidity Ratio.
  • Commission for the distribution of bonds is payable at 1% of the subscription amount.

Eligibility Criteria

  • Bonds can be bought by individuals, trusts, universities, charitable institutions and HUFs.
  • The bond can be held individually or jointly.
  • Parents or legal guardians can apply on behalf of minors.
  • It is a mandate to provide bank account details to enable the payment of interest and the principal.
  • Investors must purchase at least 2 grams of gold.
  • The maximum subscription is limited to 500 grams per person in one fiscal year. In the case of joint holders, this limit applies to the first applicant.
  • Indian residents are eligible to apply.

Documents Required

The following documents are required to be furnished by investors as proof of identity while applying for a PNB loan. Both, original as well as the photocopy of documents have to be presented at the time of loan application.

FAQs

1. What is Sovereign Gold Bond and who issues these?

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 the Reserve Bank on behalf of the Government of India.

2.Are PNB Sovereign Gold Bonds available online?

No, Punjab National Bank does not allow online applications for gold loans. However, investors can make instalment payments through online mode.

3.Is there any risk associated with PNB Sovereign Gold Bonds?

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.When will I be issued a Holding Certificate?

Certificate of Holding is issued on the date of issuance of the SGB. Certificate of Holding can be collected from the issuing banks/SHCIL offices/Post Offices/Designated stock exchanges/agents or obtained directly from RBI on email if the email address is provided in the application form.

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

In case of premature redemption, investors can approach the concerned bank/SHCIL offices/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.

End Note

Punjab National Bank’s sovereign gold bond is a convenient and reliable investment in gold. The bank offers special gold schemes that are designed to generate healthy returns on gold. Investors can buy the yellow metal from the bank directly.

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