Business Financials

Gold Bonds Issued On November 17 Eligible For Trading From Friday: RBI

Gold Bonds Issued On November 17 Eligible For Trading From Friday: RBI

Mumbai: The Reserve Bank of India on Thursday said the sovereign gold bonds (SGBs) issued on November 17 will become eligible for trading on stock exchanges from December 9.

So far, the government has come out with six tranches of the sovereign gold bonds, an alternative mode of investment to physical gold which was launched in November last year. It provides investors a choice to diversify portfolio without the need to buy the metal in physical form.

“Sovereign Gold Bonds (SGBs), issued on November 17, 2016, held in dematerialised form shall be eligible for trading from December 9, 2016 (Friday) on stock exchanges recognised…,” the RBI said.

The maximum amount subscribed by an entity under the sovereign gold bonds cannot be more than 500 grams per person per fiscal year. A self-declaration to this effect will be obtained. In case of joint holding, the investment limit of 500 grams will be applied to the first applicant only.

Bond prices are fixed in 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.

The bonds can be used as collateral for loans. The loan-to-value ratio is to be set equal to ordinary gold loan mandated by the Reserve Bank from time to time.

The capital gains tax arising on redemption of sovereign gold bonds 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.

Bonds will be tradeable on stock exchanges from a date to be notified by the RBI.