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Introduction

There are multiple ways to buy or invest in gold but Sovereign Gold Bonds is the best way. This is because it’s safe, secure, easy to manage, no need to check for impurity and above all, you are paid 2.5% interest.

South Indian Bank issues Sovereign Gold Bonds on payment of rupees and is denominated in grams of gold. The minimum investment in the bond is set at 1 gram. The bonds can be bought by Indian residents or entities and are capped at 4 kg for individuals, 4 kg for Hindu Undivided Family (HUF) and 20 kg for trusts and similar entities notified by the government.

South Indian Bank Sovereign Gold Bond - Features and Benefits

South Indian Bank Gold Deposit Scheme

Some of the key features of sovereign gold bonds offered by South Indian Bank are as follows:

Bond Issue - Starting Date

13th January 2020

Bond Issue - Ending Date

17th January 2020

Issue Price

Rs. 4,016/Gram

Minimum investment

1 gram

Maximum investment

4 kg for individuals, 4 kg for Hindu Undivided Family (HUF) and 20 kg for trusts and similar entities notified by the government

Rate of Interest

2.50 % (fixed rate) per annum

Frequency of Interest Payment

Half Yearly Rests

Mode of Holding

Paper Form or Demat Form

Tenure

8 years, early redemption allowed after 5 years

Taxation

No TDS, but annual interest is fully taxable.

Capital Gain Tax is exempted

Benefits of South Indian Bank Sovereign gold bond are as follows:

  • South Indian Bank 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.

Reasons to Invest in Sovereign Gold Bonds

There are many benefits of investing in sovereign gold bonds from South Indian Bank. The gold bonds are restricted for sale to Indian residents including individuals, Hindu Undivided Families, Trusts, Universities and Charitable Institutions.

  • These bonds can be used as collateral for loans.
  • The payment for the bonds can be made with cash up to a maximum of Rs. 20,000 or via demand draft, cheque or through e-banking.
  • These bonds are eligible to be converted into DEMAT form.
  • Gold bonds are a form of security as they are issued in the form of the Government of India stock.
  • The gold bonds are not subjected to tax. A tax benefit is given on the interest you receive from the investment.

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 proofs of identity while applying for sovereign gold bonds from South Indian Bank. 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.Why should I buy SGB rather than physical gold? What are the benefits?

The quantity of gold for which the investor pays is protected since he receives the ongoing market price at the time of redemption/ premature redemption. The SGB offers a superior alternative to holding gold in physical form. The risks and costs of storage are also eliminated.

3.Is there any risk associated with 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.

6. Can I trade these bonds?

The bonds are tradable from a date to be notified by RBI. The bonds can also be sold and transferred as per provisions of Government Securities Act, 2006. Partial transfer of bonds is also possible.

End Note

The sovereign gold bond can be bought from South Indian Bank and it 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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