- SGBs are government securities denominated in grams of gold. They are substitute for holding physical gold. Investors have to pay in cash for the issue price and the bonds will be redeemed in cash on maturity.
- Issued by: - SGBs are bonds issued by the Reserve Bank of India (RBI) on behalf of the Government of India.
- Tenure: - They have a fixed tenure of 8 years with a 5-year lock-in period. After the end of the lock-in period, clients can make a premature redemption on interest payment dates.
- Charges: - There are no charges for purchasing SGBs in the primary issue. However, delivery charges will apply if SGBs are bought in the secondary market.
- Trading SGB: - All SGBs are listed and can be sold in the secondary market just like stocks. Generally, SGB ‘s are traded at discount in the secondary market due to their low liquidity. SGBs are linked to the market price of gold.
- Interest: - SGB provides interest at the rate of 2.5% per annum on the amount of initial investment. Interest will be credited semi-annually to the bank account of the investor and the last interest will be payable on maturity along with the principal.
INTEREST RATE = 2.5% per annum
INTEREST IS PAID = semi-annually direct to bank a/c.
LAST INTEREST = is paid with principal amount.
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