Executive Summary:
This Reserve Bank of India notification announces the Sovereign Gold Bonds 2016-17 Series IV, which will be open for subscription from February 27, 2017, to March 03, 2017. The bonds will be issued on March 17, 2017 and bear interest at a rate of 2.50 percent per annum. The notification details eligibility, terms, and conditions for investment, payment, redemption, and other aspects of the bonds.
Key Points / Main Content:
* **Eligibility and Denomination:**
* Bonds may be held by resident individuals, trusts, charitable institutions, and universities.
* Denominated in units of one gram of gold and multiples thereof.
* Minimum investment is one gram, with a maximum subscription of 500 grams per person per fiscal year (April - March).
* **Issue Price and Interest:**
* The issue price will be based on the simple average closing price of gold (999 purity) published by the India Bullion and Jewellers Association Limited for the week preceding the subscription period, less ₹50 per gram.
* Interest rate is fixed at 2.50% per annum, paid semi-annually, with the last interest payment made upon maturity.
* **Subscription and Payment:**
* Applications are accepted at Scheduled Commercial Banks (excluding RRBs), designated Post Offices, Stock Holding Corporation of India Ltd (SHCIL), and recognized stock exchanges.
* Payment can be made in Indian Rupees via cash (up to ₹20,000), Demand Draft, Cheque, or Electronic banking.
* **Redemption and Maturity:**
* Bonds are repayable eight years from the date of issue (March 17, 2017).
* Premature redemption is permitted from the fifth year on interest payment dates.
* The redemption price is based on the previous week's Monday to Friday simple average closing price of gold (999 purity) published by IBJA.
* **Other Key Provisions:**
* Investment is eligible for Statutory Liquidity Ratio (SLR).
* Bonds can be used as collateral for loans (Loan to Value ratio as applicable to ordinary gold loans).
* Interest is taxable; capital gains tax on redemption for individuals is exempt.
* Nomination and transfer are allowed as per Government Securities Act, 2006, and Regulations, 2007.
* Bonds are eligible for trading as notified by the RBI.
* A commission of rupee one per hundred of the total subscription is paid to receiving offices.
Impact Analysis:
* **Investors:**
* Impact: Provides an opportunity to invest in gold-denominated bonds with a fixed interest rate and potential for capital appreciation linked to gold prices. Offers tax benefits on redemption for individuals.
* Action Required: Subscribe to the bonds between February 27, 2017, and March 03, 2017, through authorized receiving offices.
* **Scheduled Commercial Banks (excluding RRBs), Designated Post Offices, SHCIL, and Recognized Stock Exchanges:**
* Impact: These entities act as receiving offices for subscriptions and play a role in distributing the bonds.
* Action Required: Accept applications for the bonds, receive payments, and distribute Holding Certificates. Share at least 50% of commission received with agents or sub-agents.
* **Government of India:**
* Impact: The scheme is issued on behalf of the Government of India, providing a way to mobilize gold holdings and reduce the physical demand for gold.
* Action Required: Monitor the subscription and issuance process.
Key Entities Referenced
Reserve Bank of India: The central bank of India, which issued this notification.
Sovereign Gold Bonds 2016-17 Series IV: The specific series of Sovereign Gold Bonds being announced and detailed in the notification.
Government of India: The issuer of the Sovereign Gold Bonds.
Foreign Exchange Management Act, 1999: An act of the Parliament of India to consolidate and amend the law relating to foreign exchange with the objective of facilitating external trade and payments and for promoting the orderly development and maintenance of foreign exchange market in India.
Government Securities Act, 2006: An act of the Parliament of India to consolidate and amend the law relating to Government securities and its management by Reserve bank of India.
National Stock Exchange of India Ltd.: A recognized stock exchange authorized to receive applications for the Sovereign Gold Bonds.
Bombay Stock Exchange Ltd.: A recognized stock exchange authorized to receive applications for the Sovereign Gold Bonds.
Income-tax Act, 1961: The law governing taxation of income in India, relevant to the tax treatment of interest on the Sovereign Gold Bonds.
भारतीय �रज़व र् बक�
RESERVE BANK OF INDIA
____________________ ______________________
www.rbi.org.in
RBI/2016-17/234
IDMD.CDD.No.2187/14.04.050/2016-17 February 23, 2017
The Chairman & Managing Director
All Scheduled Commercial Banks,
(Excluding RRBs)
Designated Post Offices
Stock Holding Corporation of India Ltd.( SHCIL)
National Stock Exchange of India Ltd. & Bombay Stock Exchange Ltd.
Dear Sir/Madam,
Sovereign Gold Bonds 2016-17 – Series IV
Government of India has vide its Notification F.No. 4(16)-B(W&M)/2016 dated February
23, 2017 announced that the Sovereign Gold Bonds 2016 -17– Series IV (“the Bonds”)
will be open for subscription from February 27, 2017 to March 03, 2017. 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 March 17, 2017.
4. Denomination
The Bonds shall be denominated in units of one gram of gold and multiples thereof.
Minimum investment in the Bonds shall be one gram 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 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 issue price shall be ` 50 per gram less than the nominal value.
6. Interest
The Bonds shall bear interest at the rate of 2.50 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), Stock Holding Corporation of India Ltd (SHCIL) and recognized stock
exchanges viz., National Stock exchange of India Limited and Bombay Stock Exchange
Ltd. 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 up to a maximum of `
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 March 17,
2017, the date of issue of Gold bonds. Pre-mature redemption of the Bond is permitted
Page | 2from 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
previous week’s (Monday – Friday) simple average closing price for gold of 999 purity,
published by IBJA.
iii) The receiving office shall inform the investor of the date of maturity of the Gold
Bond one month before its maturity.
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)
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. Tax Treatment
Interest on the Bonds shall be taxable as per the provisions of the Income-tax Act,
1961. The capital gains tax arising on redemption of SGB 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
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)
Page | 3and the Government Securities Regulations, 2007, published in part III, Section 4 of the
Gazette of India dated December 1, 2007.
16. 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.
20. Operational guidelines relating to Sovereign Gold Bonds 2016-17 – Series IV
are issued vide circular IDMD.CDD.No.2188/14.04.050/2016-17.
Yours faithfully,
(Rajendra Kumar)
General Manager
Encls.: As above.
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