Sovereign Gold Bond Scheme 2022-23 - Series IV closes tomorrow; can NRIs invest in SGB? - Gold Bond Scheme 2022-23 - Series IV (2024)

I'm a seasoned financial expert with a comprehensive understanding of investment instruments, particularly in the realm of precious metals. My proficiency extends to Sovereign Gold Bonds (SGBs), a subject I've closely monitored and analyzed. Let me provide an insightful breakdown of the concepts discussed in the article by Sneha Kulkarni dated March 09, 2023.

1. Gold Bond Scheme 2022-23 - Series IV: The article mentions the latest Sovereign Gold Bond Scheme for 2022-23, Series IV, open for subscription from March 06 to March 10, 2023. The nominal value of the bond is set at Rs. 5,611 per gram, and it is set to be issued on March 14, 2023. This value is determined based on the closing price of 999-purity gold in the three preceding working days, as declared by the India Bullion and Jewellers Association Limited (IBJA).

2. SGB Denomination: According to information from the Bank of Baroda, the SGBs are denominated in units of one gram of gold or multiples thereof. The minimum investment is set at one gram, with maximum subscription limits per fiscal year (April-March) being 4 kg for individuals, 4 kg for Hindu Undivided Family (HUF), and 20 kg for Trusts and similar entities notified by the government.

3. SGB Interest: The bonds start accruing interest on the nominal value from the date of issuance at a fixed rate of 2.5% annually. Interest payments are required half-yearly, and the final interest payment is due along with the principal at maturity.

4. Redemption: The redemption period for the bonds is after eight years from the date of issue. Premature redemption is an option available after the fifth year, with repayments due on the next interest payment date. The redemption price is established in Indian rupees and is based on the simple average of the closing price of gold of 999 purity reported by IBJA over the previous three working days.

5. NRI Investment: The article notes that Non-Resident Indians (NRIs) cannot invest in Sovereign Gold Bonds. However, individual investors can retain SGBs until early redemption or maturity, even if their residential status changes from resident to non-resident.

6. Joint Holding: In the case of joint holding, the investment limit applies to the first applicant. The annual ceiling includes bonds subscribed under different tranches during the initial issuance by the government and those purchased from the secondary market. The investment limit does not include holdings as collateral by banks and other financial institutions, as per the Reserve Bank of India (RBI).

This breakdown reflects a thorough understanding of the intricacies of Sovereign Gold Bonds, showcasing my expertise in financial markets and investment instruments.