Personal Finance

Sovereign Gold Bond Scheme

Sovereign Gold Bond Scheme

Last Updated : Nov. 4, 2022, 11:44 a.m.

Gold is considered promising in India. Many people like to make gold investments as it is very beneficial because of its lower risk in the market.

In 2015, the Government of India launched the Gold Monetization Scheme that validates Sovereign Gold Bond s (SGB). Under this scheme, the issues are proposed in pieces by the RBI in consultation with the Indian government. It is RBI’s responsibility to issue the terms and conditions of this scheme from time to time.

Dive into this article to know more about the SGB schemes!

Overview of the SGB Schemes

SGB, i.e., Sovereign Gold Bond , are bonds called in grams of gold under government securities. The interest rate for these bonds is 2.50% p.a., with eight-year tenure. However, you can also break the bond during the 5th, 6th, or 7th year.

You can invest in this scheme with a minimum of 1 gram of gold and upto maximum of 4 kg limit. This limit is for a Hindu-Undivided family . While for trusts and other similar organisations, this limit is upto 20 kg.

Beneath the Government Security Act 2006, the gold bonds are issued as stocks, while investors will receive Holding Certificate for investing.

Who Can Invest Under SGB Schemes?

With lesser restrictions and varied benefits, the Sovereign Gold Bond scheme is the most profitable for investments. If you like to invest in low-risk return plans, these schemes are for you. You can earn high returns with these bonds.

Other than this, these bond schemes are your best options if you are interested in diversified investment plans. In case of a fall in the equity market, an increase in gold values will compensate for your investment risks.

Why Should You Invest in SGB Schemes?

Investing in Sovereign Gold Bond s has many advantages. Some of them are given below:

  • You can use these bonds as your guarantee for loans.
  • You can make bond payments via cash (upto ₹20,000), cheque, demand draft, or e-banking.
  • You can convert these bonds into Demat form.
  • The Indian government launches THese bonds. So they are highly secured.
  • The interest return on these bonds is taxable per the Income Tax Act 1961.
  • There is no storage risk, making charges, or issues with these schemes.

How to Invest in SGB Schemes?

The application form to invest in Sovereign Gold Bond schemes is available at banks and post offices. You can visit RBI’s website to apply via online application. However, you must have a PAN number issued by the Indian Income Tax Department. Otherwise, you cannot apply for these investment schemes.

What Are the Eligibility Criteria for SGB Schemes?

It will be best if you satisfy the following eligibility criteria to become an investor in these schemes:

  • These bonds are only for Indian residents.
  • Associations, individuals, HUFs, trusts, etc., are all permitted to invest in these schemes.
  • You can jointly invest under these bonds with other appropriate members.
  • Their parents or guardians can invest in SGB schemes on behalf of minors.

What Are the Characteristics of SGB Schemes?

Some characteristics of the Sovereign Gold Bond schemes are given below:

  • These bonds are equivalent to the gold weight and its value.
  • These are highly flexible schemes. You can select your investment amount as per your choice.
  • You can earn an interest amount every year with these schemes.
  • These bonds are safe and secure and come with a guarantee of purity as they are backed with government securities.
  • You can give these bonds to others also.
  • These bonds are applicable for trade on stock exchanges.

What Are the Advantages of SGB Schemes?

Some advantages that an investor can get with Sovereign Gold Bond s are given below:

  • If you break your bonds before maturity, you will get the interest return fairly on your investments.
  • You can trade your gold bonds on different stock exchanges within a certain period.
  • You can use your gold bonds as a security or collateral in banks against loans.

What Are the Risks Associated With SGB Schemes?

Usually, there are low risks that are associated with Sovereign Gold Bond s. However, the rates of gold depend on the market performance only. If there is any down in gold price, there will be a risk on the capital you invest in the physical gold. Yet, investors can comfort themselves as there is no change in the amount of gold they purchase, whatever the market rates of gold.


Applying for SGB schemes is very simple and has many benefits for you. Although investing in these schemes is safe and secure, before buying SGBs consider all the advantages and disadvantages of these schemes properly. Ensure that you learn everything about these bonds before making investments.

Related Post