Sovereign Gold Bond Scheme 2016 -17 – Series III – Issue Price: The issue price has been fixed at Rs. 2957/- (Rupees Two Thousand Nine Hundred Fifty Seven only) per gram of gold. RBI Press Release: 2016-2017/999

The Reserve Bank of India, in consultation with Government of India, has decided to issue Sovereign Gold Bonds 2016-17 – Series III. Applications for the bond will be accepted from October 24, 2016 to November 2, 2016. The Bonds will be issued on November 17, 2016. The Bonds will be sold through banks, Stock Holding Corporation of India Limited (SHCIL), designated Post Offices, and recognised Stock Exchanges viz., National Stock Exchange of India Limited and Bombay Stock Exchange. The features of the Bond are given below:

Sl. No.

Item

Details

1 Product name Sovereign Gold Bond 2016-17 – Series III
2 Issuance To be issued by Reserve Bank India on behalf of the Government of India.
3 Eligibility The Bonds will be restricted for sale to resident Indian entities including individuals, HUFs, Trusts, Universities and Charitable Institutions.
4 Denomination The Bonds will be denominated in multiples of gram(s) of gold with a basic unit of 1 gram.
5 Tenor The tenor of the Bond will be for a period of 8 years with exit option from 5th year to be exercised on the interest payment dates.
6 Minimum size Minimum permissible investment will be 1 gram of gold.
7 Maximum limit The maximum amount subscribed by an entity will not be more than 500 grams per person per fiscal year (April-March). A self-declaration to this effect will be obtained.
8 Joint holder In case of joint holding, the investment limit of 500 grams will be applied to the first applicant only.
9 Issue price Price of Bond will 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 of the Gold bonds will be ₹ 50 per gram less than the nominal value.
10 Payment option Payment for the Bonds will be through cash payment (upto a maximum of ₹ 20,000) or demand draft or cheque or electronic banking.
11 Issuance form The Gold bonds will be issued as Government of India Stocks under GS Act, 2006. The investors will be issued a Holding Certificate for the same. The Bonds are eligible for conversion into demat form.
12 Redemption price The redemption price will be in Indian Rupees based on previous week’s (Monday-Friday) simple average of closing price of gold of 999 purity published by IBJA.
13 Sales channel Bonds will be sold through banks, Stock Holding Corporation of India Limited (SHCIL), designated Post Offices (as may be notified) and recognised stock exchanges viz., National Stock Exchange of India Limited and Bombay Stock Exchange, either directly or through agents.
14 Interest rate The investors will be compensated at a fixed rate of 2.50 per cent per annum payable semi-annually on the nominal value.
15 Collateral Bonds can be used as collateral for loans. The loan-to-value (LTV) ratio is to be set equal to ordinary gold loan mandated by the Reserve Bank from time to time.
16 KYC documentation Know-your-customer (KYC) norms will be the same as that for purchase of physical gold. KYC documents such as Voter ID, Aadhaar card/PAN or TAN /Passport will be required.
17 Tax treatment The interest on Gold Bonds shall be taxable as per the provision of Income Tax Act, 1961 (43 of 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.
18 Tradability Bonds will be tradable on stock exchanges within a fortnight of the issuance on a date as notified by the RBI.
19 SLR eligibility The Bonds will be eligible for Statutory Liquidity Ratio purpose.
20 Commission Commission for distribution of the bond shall be paid at the rate of 1% of the total subscription received by the receiving offices 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.
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Sovereign Gold Bonds 2016-17 Series III – Operational Guidelines [RBI/2016-17/99 IDMD. CDD .No. 894 /14.04.050/2016-17 October 20, 2016]

This has reference to the GoI notification F.No.4(16)-W&M/2016 and RBI circular IDMD. CDD.No.893/ 14.04.050/ 2016-17 dated October 20, 2016 on the Sovereign Gold Bonds. FAQs in this regard have been placed on our website (www.rbi.org.in). Operational guidelines with regard to this scheme are given below:

1. Application

Application forms from investors will be received at branches during normal banking hours from October 24, 2016 to November 2, 2016. Receiving Offices need to ensure that the application is complete in all respects as incomplete applications are liable to be rejected. Relevant additional details may be obtained from the applicants, where necessary. The Receiving Offices may make arrangements to enable the investors to apply online, in the interest of better customer service.

2. Joint holding and nomination

Multiple joint holders and nominees (of first holder) are permitted. Necessary details may be obtained from the applicants as per practice.

3. Know-Your-Customer (KYC) requirements

Know-Your-Customer (KYC) norms shall be the same as that for purchase of physical form of gold. Identification documents such as passport, the Permanent Account Number (PAN) Card, the Voter’s Identity Card, Aadhaar card shall be required. In case of minors only, the bank account number may also be considered as valid for KYC verification. KYC will be done by the issuing banks/SHCIL offices/Post Offices/agents.

4. Interest on application money

Applicants will be paid interest at prevailing savings bank rate from the date of realization of payment to the settlement date, i.e. the period for which they are out of funds. In case the applicant’s bank account is not with the receiving bank, the interest has to be credited by electronic fund transfer to the account details provided by the applicant.

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5. Cancellation

Cancellation of application is permitted till the closure of the issue, i.e., November 2, 2016. Part cancellation of submitted request for purchase of gold bonds is not permitted. No interest on application money needs to be paid if the application is cancelled.

6. Lien marking

As the bonds are government securities, lien marking, etc. will be as per the extant legal provisions of Government Securities Act, 2006 and rules framed there under.

7. Agency arrangement

Receiving Offices may engage NBFCs, NSC agents, LIC agents and others to collect application forms on their behalf. Banks may enter into arrangements or tie-ups with such entities. 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.

8. Processing through RBI’s e-Kuber system

Sovereign Gold Bonds will be available for subscription at the branches of scheduled commercial banks and designated post offices through RBI’s e- Kuber system. The e-Kuber system can be accessed either through Infinet or Internet. The Receiving Offices need to enter the data or carry out bulk upload for the subscriptions received by them. They may ensure accuracy of entry of data to prevent occurrence of any inadvertent errors. An immediate confirmation will be provided to them for receipt of application. In addition, a confirmation scroll will be provided for file uploads to enable the Receiving Offices to update their database. On the date of allotment, i.e., November 17, 2016, Certificates of Holding will be generated for all the subscriptions in the name of the sole/principal holder. The Receiving Offices can download the same and take printouts. The Certificates of Holding will also be sent through e-mail to the investors who have provided their email address. The securities will be credited in their de-mat accounts within 2-3 days of allotment, subject to matching of particulars furnished in the application with the Depositories’ records.

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9. Printing Certificates of Holding

Certificates of Holding need to be printed in colour on A4 size 100 GSM paper.

10. Servicing and follow up

Receiving Offices, i.e., branches of the scheduled commercial banks, designated post offices, SCHIL and stock exchanges (NSE Ltd and BSE) will “own” the customer and provide necessary services with regards to this bond e.g. update contact details, receive requests for premature encashment, etc. Receiving Offices will be required to preserve applications till the bonds are matured and are repaid.

11. Tradability

The Bonds shall be eligible for trading on a date notified by the Reserve Bank of India. (It may be noted that only bonds held in demat form with depositories can be traded in stock exchanges)

12. Contact details

Any queries/clarifications may be e-mailed to the following:

(a) Sovereign Gold Bond related: sgb@rbi.org.in
(b) IT related: CBOT@rbi.org.in