Executive Summary:
This document announces the issuance of Sovereign Gold Bonds 2017-18 Series II, which will be open for subscription from July 10, 2017, to July 14, 2017, with the date of issue being July 28, 2017. It outlines the terms and conditions for investment, including eligibility, denomination, issue price, interest rate, and redemption process. The bonds are issued by the Government of India and managed by the RBI.
Key Points / Main Content:
Eligibility and Form:
* Bonds can be held by resident individuals, trusts, charitable institutions, and universities.
* Issued as Government of India Stock in Holding Certificate Form C and eligible for demat conversion.
Dates and Denomination:
* Date of Issue: July 28, 2017.
* Denominated in units of one gram of gold and multiples thereof.
* Minimum investment: one gram; maximum subscription: five hundred grams per person per fiscal year (April - March).
Pricing and Interest:
* Issue price based on the simple average of the closing price of gold (999 purity) published by the India Bullion and Jewelers Association Limited for the week (Monday to Friday) preceding the subscription period, less ₹50 per gram.
* Interest rate: 2.50 percent fixed rate per annum, paid semi-annually, with the last interest payment on maturity.
Subscription and Payment:
* Applications accepted by Scheduled Commercial Banks (excluding RRBs), designated Post Offices, Stock Holding Corporation of India Ltd (SHCIL), and recognized stock exchanges.
* Payment accepted in Indian Rupees via cash (up to ₹20,000), Demand Drafts, Cheque, or Electronic banking.
Redemption and Repayment:
* Repayable after eight years from the date of issue (July 28, 2017), with premature redemption permitted from the fifth year on interest payment dates.
* Redemption price based on the previous week's (Monday-Friday) simple average closing price of gold (999 purity) published by IBJA.
* The receiving office will inform the investor of the date of maturity of the Bond one month before its maturity.
Other Key Features:
* Eligible for Statutory Liquidity Ratio (SLR).
* Can be used as collateral for loans; Loan to Value ratio as per RBI guidelines for ordinary gold loans.
* Interest is taxable; capital gains tax on redemption for individuals is exempted; indexation benefits provided on transfer of bond.
* Nomination and transferability are allowed as per Government Securities Act, 2006, and Regulations, 2007.
* Eligible for trading as notified by the Reserve Bank of India.
* Commission for distribution: Rupee one per hundred of the total subscription.
Impact Analysis:
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.:
* Impact: Act as receiving offices for applications and manage the distribution and redemption of the bonds.
* Action Required: Accept applications for the bonds, process payments, issue acknowledgment receipts (Form B), distribute bonds, and manage the redemption process. Share at least 50% of the commission received with agents or sub-agents.
Investors:
* Impact: Can invest in Sovereign Gold Bonds as per the specified terms and conditions.
* Action Required: Subscribe to the bonds during the subscription period (July 10, 2017 to July 14, 2017) by filling out the application form (Form A) and making payments through authorized channels.
Government of India:
* Impact: Issuer of the Sovereign Gold Bonds, responsible for setting the terms and conditions.
* Action Required: Monitor the subscription and redemption process, manage the interest payments, and ensure compliance with the stated terms and conditions.
Reserve Bank of India:
* Impact: Manages the issuance and trading of the bonds.
* Action Required: Notify the date from which the Bonds shall be eligible for trading.
Key Entities Referenced
Sovereign Gold Bonds 2017-18 Series II: A scheme announced by the Government of India allowing investment in gold bonds.
Government of India: The governing body of India, responsible for announcing the Sovereign Gold Bonds scheme.
Reserve Bank of India: The central bank of India, involved in the issuance and regulation 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 stock exchange in India authorized to receive applications for Sovereign Gold Bonds.
Bombay Stock Exchange Ltd.: A stock exchange in India authorized to receive applications for Sovereign Gold Bonds.
Income-tax Act, 1961: An act of the Parliament of India that governs the taxation of income.
RBI/2017-18/17
IDMD.CDD.No.28/14.04.050/2017-18 July 06, 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 2017-18 – Series II
Government of India has vide its Notification F.No. 4(20)-B/(W&M)/2017 dated July 06,
2017 announced that the Sovereign Gold Bonds 2017 -18– Series II (“the Bonds”) will
be open for subscription from July 10, 2017 to July 14, 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 July 28, 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 Jewelers
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.
Page | 29. Redemption
i) The Bonds shall be repayable on the expiration of eight years from July 28,
2017, 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
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.
Page | 315. 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.
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 I are
issued vide circular IDMD.CDD.No.29/14.04.050/2017-18 dated July 06, 2017.
Yours faithfully,
(Shyni Sunil)
Deputy General Manager
Encls.: As above.
Page | 4