SGBs offer the advantage of liquidity, as they can be traded on stock exchanges within a fortnight of issuance, as notified by the Reserve Bank of India.
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Sovereign Gold Bonds Scheme 2023-24: The first tranche of sovereign gold bonds (SGB) for 2023-24 was opened for subscription on Monday, June 19. The issue is open till June 23, with the settlement date of June 27, 2023. The SGBs can be purchased online through a Demat account or net banking option. The SGBs, backed by the central government, are the preferred form of investment for risk-averse investors.
If you also have been looking for a reason to invest in SGBs, the State Bank Of India is here to offer some help.
The country’s largest public sector lender suggested six seasons to invest in the SGBs issued by the Reserve Bank Of India.
1. Assured Returns: RBI’s Sovereign Gold Bond (SGBs) offered an assured return of 2.5 per cent, payable half-yearly. This provides investors with a steady income stream, making these bonds an appealing investment option.
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2. Storage Convenience and Security: One of the key advantages of SGBs is the elimination of storage hassles associated with physical gold. Investors can enjoy the peace of mind that comes with knowing their investments are securely held, without the need for physical storage arrangements.
3. Capital Gain Tax Exemption: Investors can benefit from a significant advantage when it comes to tax liability. The SGB Scheme, launched by the government under the Gold Monetization Scheme, ensures that no Capital Gain Tax is imposed upon redemption.
4. Liquidity and Tradability: SGBs offer the advantage of liquidity, as they can be traded on stock exchanges within a fortnight of issuance, as notified by the Reserve Bank of India. This traceability provides investors with flexibility, allowing them to adjust their investment positions or exit the market as per their financial requirements.
5. Collateral for Loans: Another appealing aspect of SGBs is their eligibility as collateral for loans. The loan-to-value (LTV) ratio is set equal to the ordinary gold loan mandated by the RBI. This feature provides investors with the potential to unlock liquidity and financing options based on their bond holdings.
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6. No GST and Making Charges: SGBs enjoy the advantage of being exempt from goods and services tax (GST), unlike physical gold coins and bars. Furthermore, investors are not burdened with making charges when investing in these bonds. These cost-saving benefits make Sovereign Gold Bonds an attractive investment avenue, eliminating unnecessary expenses.
The scheme was launched in November 2015 with the 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.
