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  • Sovereign Gold Bond 2022-23 – Series I available from June 20-24: Here’s everything you need to know

    Wed June 22 2022


    Sovereign Gold Bond Scheme 2022-23 – Series I: The first tranche of the Sovereign Gold Bond Scheme 2022-23 by the central government has opened for subscription on Monday, June 20, 2022, and it will be available for subscription until Friday, June 24, 2022.


    The Reserve Bank of India (RBI) last Friday fixed the issue price of Sovereign Gold Bond Scheme 2022-23 – Series I at Rs 5,091 per gram.


    Under the sovereign gold bond scheme, the RBI issues the bonds on behalf of the government. These bonds are sold through banks, Stock Holding Corporation of India (SHCIL), Clearing Corporation of India (CCIL), post offices, and stock exchanges – National Stock Exchange of India (NSE) and BSE. It was launched in November 2015 with an objective to reduce the demand for physical gold and shift a part of the domestic savings – used for the purchase of gold – into financial savings.

    The Government of India, in consultation with the central bank, has decided to offer a discount of Rs 50 per gram on the nominal value to those investors who will apply online and the payment against their application is made through digital mode.

    “For such investors, the issue price of Gold Bond will be ₹5,041/- (Rupees Five thousand and forty-one only) per gram of gold,” the central bank informed on Friday.


    The price of the sovereign gold bonds is fixed on the basis of a simple average of the closing price of gold of 999 purity, published by the India Bullion and Jewellers Association (IBJA) for the last three working days of the week preceding the subscription period (i.e. June 15-17, 2022).


    The issue price for Sovereign Gold Bond Scheme 2021-22 – Series X, which was available for subscription from February 28–March 4, 2022, was Rs 5,109 per gram.


    These bonds are denominated in multiples of gram(s) of gold with a basic unit of one gram. The tenor of the bond is for a period of eight years with a premature exit option after fifth year.


    The minimum permissible investment is one gram of gold and the maximum limit of subscription is 4 kg for individual, 4 kg for HUF and 20 kg for trusts and similar entities per financial year (April-March).


    Investment in sovereign gold bonds sharply rose during Covid-impacted years accounting for nearly 75 per cent of total sales of the bonds since the inception of the scheme in November 2015 as investors looked for safe havens amid volatility in the stock markets with 2020-21 (FY21) and 2021-22 (FY22).


    According to the RBI data, a total of Rs 38,693 crore (90 tonnes of gold) has been raised through the scheme since its inception in November 2015.


    During FY22 and FY21, the two Covid-affected fiscal years, investors bought the bonds for an aggregate amount of Rs 29,040 crore or about 75 per cent of the total sales of the bonds since their launch.


    The central bank issued 10 tranches of sovereign gold bonds in FY22 for an aggregate amount of Rs 12,991 crore (27 tonnes) while in FY21, it had issued 12 tranches of gold bonds for an aggregate amount of Rs 16,049 crores (32.35 tonnes).


    A total of Rs 9,652.78 crore (30.98 tonnes) were raised at the end of the FY20 through the scheme in 37 tranches since its inception in November 2015. The first tranche of SGBs was launched in November 2015. Subsequently, two tranches were floated in January and March 2016.


    Commenting on the latest sovereign gold bond scheme, Nish Bhatt, Founder and CEO at Millwood Kane International, said, “Investment in Sovereign Gold Bonds has become an accepted practice, fast replacing physical gold. RBI has already raised in excess of Rs 16,000 crore in FY21, and over Rs 25,702 crore via SGBs since 2015.”


    He further noted, “Investment in non-physical gold, digital gold provides higher liquidity, eliminates storage costs, and is easier to sell than physical gold. Also, an investment in SGBs comes with an interest coupon payable semi-annually. After touching a high in the month of April, gold prices have cooled off due to the rally in the US Dollar. A higher US dollar makes it expensive to own gold. An expectation of a further rise in inflation, interest rates, and yields across the globe will restrict much of the gains for gold. Traditionally, gold prices tend to rise during uncertain times. The escalation in the geopolitical tensions in Russia-Ukraine, new variants of the virus may push gold prices upwards.”