Executive Summary:
This document, issued by the Reserve Bank of India, details the terms and conditions for the Sovereign Gold Bonds, 2015-16, which are open for subscription from January 18, 2016, to January 22, 2016. The bonds will be issued on February 08, 2016, and bear an interest rate of 2.75 percent per annum. It outlines eligibility, denomination, issue price, and other key features of the bonds.
Key Points / Main Content:
* **Eligibility and Form:**
* Bonds can be held by resident Indian individuals, on behalf of a minor child, jointly, or by a Trust, Charitable Institution, or University.
* Issued as Government of India Stock, investors receive a Holding Certificate (Form C), and bonds are convertible to demat form.
* **Dates, Denomination, and Pricing:**
* Date of Issuance: February 08, 2016.
* Denominated in units of one gram of gold and multiples thereof.
* Minimum investment: two grams; maximum subscription: five hundred grams per person per fiscal year (April-March).
* Issue price is based on the previous week's (Monday-Friday) simple average closing price for gold of 999 purity, published by the India Bullion and Jewellers Association Ltd. (IBJA).
* **Interest and Payment:**
* Interest rate: 2.75 percent fixed per annum on the initial investment.
* Interest is paid semi-annually, with the last payment on maturity along with the principal.
* Payment accepted in Indian Rupees via cash (up to Rs. 20,000), Demand Drafts, Cheques, or Electronic Banking.
* **Redemption and Repayment:**
* Repayable after eight years from the date of issue (February 8, 2016).
* Premature redemption is permitted from the fifth year on interest payment dates.
* Redemption price is based on the previous week's (Monday-Friday) simple average closing price for gold of 999 purity, published by IBJA.
* Investors will be informed of the maturity date one month prior.
* **Other Key Features:**
* Eligible for Statutory Liquidity Ratio (SLR).
* Can be used as collateral for loans, with Loan to Value ratio as mandated by RBI.
* Interest is taxable per the Income-tax Act, 1961; capital gains tax treatment is the same as for physical gold.
* Subscription via Form A; acknowledgment receipt in Form B.
* Nomination/cancellation via Form D/E.
* Transferable via Form F.
* Eligible for trading as notified by RBI.
* **Distribution Commission:**
* Commission for distribution is rupee one per hundred of the total subscription. Receiving offices shall share at least 50% of the commission with the agents or sub-agents.
Impact Analysis:
**Investors:**
* Impact: Investors have the opportunity to invest in gold bonds with a fixed interest rate and potential capital appreciation. They are subject to tax on interest earned and capital gains.
* Action Required: Subscribe to the bonds during the specified period (January 18, 2016 - January 22, 2016) using Form A, and understand the tax implications.
**Scheduled Commercial Banks (excluding RRBs) and Stock Holding Corporation of India Ltd (SHCIL):**
* Impact: These entities are authorized to receive applications for the bonds and are responsible for distributing them.
* Action Required: Accept applications for the bonds, either directly or through agents, provide acknowledgment receipts (Form B), and share commission with agents/sub-agents.
**Designated Post Offices:**
* Impact: These offices are authorized to receive applications for the bonds and are responsible for distributing them.
* Action Required: Accept applications for the bonds, either directly or through agents, provide acknowledgment receipts (Form B).
**Agents / Sub-agents:**
* Impact: These entities procure business for the receiving offices.
* Action Required: Procure business for the bonds and receive at least 50% of the commission received by the receiving offices for the business they procure.
Key Entities Referenced
Sovereign Gold Bonds, 2015-16: A Government of India scheme for investment in gold bonds.
Government of India: The governing body that issued the notification regarding Sovereign Gold Bonds.
Reserve Bank of India: The central bank of India, involved in the issuance and regulation of the Sovereign Gold Bonds.
Stock Holding Corporation of India Ltd: An entity authorized to receive applications for the Sovereign Gold Bonds.
Foreign Exchange Management Act, 1999: The Indian law defining 'person resident in India' for eligibility in the Sovereign Gold Bond scheme.
Government Securities Act, 2006: Indian law governing the issuance and transfer of government securities, including the Sovereign Gold Bonds.
India Bullion and Jewellers Association Ltd: The organization that publishes the gold price used to determine the issue and redemption price of the Sovereign Gold Bonds.
Income-tax Act, 1961: The Indian law governing the taxation of interest earned on the Sovereign Gold Bonds.
भारतीय �रज़व र् बक�
BANK OF INDIA
____________________ RESERVE ______________________
www.rbi.org.in
RBI/2015-16/290
IDMD.CDD.No.1573/14.04.050/2015-16 January 14, 2016
The Chairman& Managing Director
All Scheduled Commercial Banks,
(Excluding RRBs)
Stock Holding Corporation of India Ltd.( SHCIL)
Dear Sir/Madam,
Sovereign Gold Bonds, 2015-16
Government of India has vide its Notification F.No. 4(19)-W&M/2014 dated January 14,
2016 announced that the Sovereign Gold Bonds, 2016 (“the Bonds”) will be open for
subscription from January 18, 2016 to January 22, 2016. The Government of India may,
with prior notice, close the Scheme before the specified period. The terms and
conditions of the issuance of the Bonds shall be as follows:
1. Eligibility for Investment:
The Bonds under this Scheme may be held by a person resident in India, being an
individual, in his capacity as such individual, or on behalf of minor child, or jointly with any
other individual. The bond may also be held by a Trust, Charitable Institution and
University. “Person resident in India” is defined under section 2(v) read with section 2(u)
of the Foreign Exchange Management Act, 1999
2. Form of Security
The Bonds shall be issued in the form of Government of India Stock in accordance with
section 3 of the Government Securities Act, 2006. The investors will be issued a
Holding Certificate (Form C). The Bonds shall be eligible for conversion into de-mat
form.
आंत�रक ऋण �बंध िवभाग, क��ीय कायार्लय, क��ीय कायार्लय भवन , शहीद भगत�सहं मागर् 23 वी मंिजल, मुंबई – 400 001, भारत
फोन : (022) 2266 1602-04, फैक्स : (022) 22644158, 2270 5125, ई-मेल :cgmidmd@rbi.org.in
Internal Debt Management Department, Central Office, Central Office Building, 23rdFloor, ShahidBhagat Singh Marg,, Mumbai-400 001, India
Telephone:02222661602-04,Fax :( 022) 2264 4158, 2270 5125,Email :cgmidmd@rbi.org.in
िहन्दी आसान हइै सका �योग बढ़ाइए। ,
चेतावनी :�रज़वर् ब�क �ारा ईमेल, डाक, एसएमएस या फोन काल के ज�रये �कसी क� भी �ि�गत जानकारी जैसे ब�क खाते का ब्यौरा, पासवडर् आ�द नह� मांगी जाती है।
यह धन रखने या देने का �स्ताव भी नह� करता ह।ै ऐसे �स्ताव� का �कसी भी तरीके से जवाब मत दीिजये।
Caution: RBI never sends emails, SMSs or makes calls asking forpersonal information like bank account details, passwords, etc. It never keeps or3. Date of Issue
Date of issuance shall be February 08, 2016.
4. Denomination
The Bonds shall be denominated in units of one gram of gold and multiples thereof.
Minimum investment in the Bonds shall be two grams with a maximum limit of
subscription of five hundred grams per person per fiscal year (April – March).
5. Issue Price
Price of the Bonds shall be fixed in Indian Rupees on the basis of the previous
week’s (Monday – Friday) simple average closing price for gold of 999 purity, published
by the India Bullion and Jewellers Association Ltd. (IBJA).
6. Interest
The Bonds shall bear interest at the rate of 2.75 percent (fixed rate) per annum on
the amount of initial investment. Interest shall be paid in half-yearly rests and
the last interest shall be payable on maturity along with the principal.
7. Receiving Offices
Scheduled commercial banks (excluding RRBs), designated Post Offices (as may be
notified) and Stock Holding Corporation of India Ltd (SHCIL) are authorized to receive
applications for the Bonds either directly or through agents.
8. Payment Options
Payment shall be accepted in Indian Rupees through Cash upto a maximum of
Rs.20,000/- or Demand Drafts or Cheque or Electronic banking. Where payment is made
through cheque or demand draft, the same shall be drawn in favour of receiving office.
9. Redemption
i) The Bonds shall be repayable on the expiration of eight years from February 8,
2016, the date of issue of Gold bonds. Pre-mature redemption of the Bond is permitted
from fifth year of the date of issue on the interest payment dates.
ii) The redemption price shall be fixed in Indian Rupees on the basis of the
Page | 2previous week’s (Monday – Friday) simple average closing price for gold of 999 purity,
published by IBJA.
10. Repayment
The receiving office shall inform the investor of the date of maturity of the Bond one
month before its maturity.
11. Eligibility for Statutory Liquidity Ratio (SLR)
The investment in the Bonds shall be eligible for SLR.
12. Loan against Bonds
The Bonds may be used as collateral for loans. The Loan to Value ratio will be as
applicable to ordinary gold loan mandated by the RBI from time to time. The lien on the
Bonds shall be marked in the depository by the authorized banks.
13. TaxTreatment
Interest on the Bonds shall be taxable as per the provisions of the Income-tax Act,
1961. Capital gains tax treatment will be the same as that for physical gold.
14. Applications
Subscription for the Bonds may be made in the prescribed application form (Form ‘A’)
or in any other form as near as thereto stating clearly the grams of gold and the full
name and address of the applicant. The receiving office shall issue an acknowledgment
receipt in Form ‘B’ to the applicant.
15. Nomination
Nomination and its cancellation shall be made in Form ‘D’ and Form ‘E’, respectively, in
accordance with the provisions of the Government Securities Act, 2006 (38 of 2006)
and the Government Securities Regulations, 2007, published in part III, Section 4 of the
Gazette of India dated December 1, 2007.
Page | 316. Transferability
The Bonds shall be transferable by execution of an Instrument of transfer as in Form
‘F’, in accordance with the provisions of the Government Securities Act, 2006 (38 of
2006) and the Government Securities Regulations, 2007, published in part III, Section 4
of the Gazette of India dated December 1, 2007.
17. Tradability of bonds
The Bonds shall be eligible for trading from such date as may be notified by the
Reserve Bank of India.
18. Commission for distribution
Commission for distribution shall be paid at the rate of rupee one per hundred of the
total subscription received by the receiving offices on the applications received 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.
19. All other terms and conditions specified in the notification of Government of
India in the Ministry of Finance (Department of Economic Affairs) vide number F.
No.4(13) W&M/2008, dated 8th October 2008 shall apply to the Bonds.
Yours faithfully,
(Arun Bhagoliwal)
Deputy General Manager
Encls.: As above.
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