SBI Sovereign Gold Bonds - Eligibility criteria for Sovereign Gold Bonds

The government of India introduced sovereign gold bonds in 2015 under the Gold Monetization Scheme.  Gold bonds, under this scheme, are issued each month, as they have been from October 2019 to March 2020. As per this scheme, the gold bond issues are in tranches, and are sanctioned by the RBI after due consultation with the Indian Government.

Right now, the Sovereign Gold Bond Scheme of 2020-2021 is open for investor subscription. Subscription for Sovereign Gold Bonds 2020-21 was opened from March 1, and will close on March 5. The Bonds are denominated in gram(s) of gold with 1 gram as the basic unit. Issue price for the bonds has been fixed at ₹4,662/gram.

The RBI has announced a discount of ₹50/gram for those applying online and making payment through digital mode - hence pricing it for them at ₹4,612/gram. The interest for these is generally 2.5% per annum, and one is able to pay this semi-annually on the gold bond’s nominal value.

The bond’s tenure is generally 8 years, but these do come with an exit option which is available in the 5th, 6th and 7th years on the interest payment dates.  The maximum gold limits which one can subscribe to is 4 kg. This is 4 kg for a Hindu undivided family and 20 kg for similar other family unit entities. Co-owned gold bonds have a limit of 4 kg for just the first applicant.

Why should you invest in Gold Bonds?

There are many benefits in owning a gold bond. Before going to the benefits though, you need to know that gold bonds right now are restricted to residents of India. Further, these customers need to be from Hindu Undivided Families, Universities, Trusts and charitable institutions.

Now, without further ado, here are the benefits,

• Bonds can be used as collateral for a Loan against Gold
• One can make payments for the bonds with cash till Rs. 20,000. Alternatively, one can make a demand draft of the same amount, as well as by cheque and e-banking.
• Gold bonds can be converted to DEMAT form.
• These are securities that are issued by the government in the form of government stock.
• Gold bonds are not subject to tax.
  

How do you invest in gold bonds?

As we said before, gold bonds are issued by the Reserve Bank of India after consulting with the government of India. These are issued in tranches.

Some banks like the SBI offer gold bonds. These are not the same as gold loans. These are gold bonds that you invest in. To invest in them, you have to fill out an application form that these banks provide you. These forms are available at designated post offices. However, you can also download the form at the RBI website. You can even apply for bonds online at the websites of SBI and Kotak Mahindra.

To apply, you need to provide things like your PAN card number. Without the PAN number, you cannot apply.

Gold bonds are sold through the offices of Scheduled Private Banks, Nationalized Banks, Designated post offices, and from Stock Holding Corporation of India.

However, not everyone can apply and be accepted to invest in Gold Bonds. There is an eligibility criterion that needs to be followed. That means even if you do apply, it does not give you a guarantee to get a gold bond. As said before, you can of course apply for them on the websites of listed commercial banks.
Eligibility criteria for Sovereign Gold Bonds

People must be:

• Indian resident: Sovereign gold loan schemes from SBI, and other banks, can only be had if you are an Indian resident.
• Individuals and groups: Eligible parties also include individuals, trusts, associations, HUFs, and others as long as they are Indian citizens. Individuals and entities can also jointly invest in gold bonds with other members who are eligible.
• Minors: Gold bonds can be purchased for minors by parents and guardians.
  

SBI Gold Schemes

SBI or the State Bank of India has a number of gold investment schemes for gold purchase, investments and loans. You can buy gold coins from the authorized SBI branches, and even invest in sovereign gold bonds and in the bank’s mutual fund schemes. These have systematic transfer and investment plan options. Where there is a sudden financial need, you can pledge these gold bonds and as securities to get a loan.

SBI Sovereign Gold Bond eligibility

• Joint investors and individuals who are above 21 years of age
• Bonds have to be issued through SBI
• The customer needs to have a DEMAT account with SSL.
  

SBI Sovereign Gold Bond required documents

Firstly, go through this form. You’ll have to fill it up to apply. The needed documents are:

• Last monthly salary slip showing deductions of self and co-applicant
• Form 16 from employer of self and co-applicant
• Copy of income tax returns of the last 2 years, duly acknowledged, by ITO with computation of income, and for applicant and others too
• Copy of Voter ID or passport or Driving License for ID proof
• Copy of Telephone bill, electricity bill, passport or voter’s ID for address proof
• Latest passport sized photo of self and co-applicant
• Last 6 months bank statement showing salary credit for both self and co-applicant
• Proof of official address if applicant is an employee
  

SBI Sovereign Gold Bonds - Other things to know about

There are certain forms that are used for specific purposes. You can get these at the SBI branch from where you are applying.

• For the application- Form A
• For acknowledgement of receipt- Form B
• For holding certificate- Form C
• For Cancellation of nominee- Form E
• For transfers- Form  F