SBI Sovereign Gold Bond - 2025

FAQs on SBI Sovereign Gold Bond Scheme

• What are the risks associated with investing in SGBs?

  If the market price of gold declines and the market value of gold is low at the time of redemption, then there is a risk of capital loss. The investor will not lose in terms of the units of gold purchased.

• Can an SGB be jointly held?

  Yes, joint holdings of SGBs are allowed.

• Can I buy an SGB for my minor child?

  Yes, you can purchase SGBs for minors. The application for the SGB must be made by the parent or guardian on behalf of the minor.

• What is the eligibility requirements of the SGBs?
  1. Residents of India as defined under Foreign Exchange Management Act, 1999.
  2. Eligible investors include individuals, charitable institutions, trusts, HUFs, universities, etc.
• What are the minimum and maximum limit for investment in SGBs?

  The minimum investment required for the SGBs is 1 gram of gold. Bonds will be issued in denominations of 1 gram and multiples thereof. Each person can purchase a maximum of 500 grams of gold per fiscal year. For joint holders, the limits apply to the first applicant.

• Where are SGB application forms available?

  Forms are available on the RBI website. Issuing banks, designated Post Offices and agents will also have SGB application forms. Banks may also provide the option of applying online through their own website.

• What are the Know-Your-Customer (KYC) norms for SGBs?

  There is no difference between the Know-Your-Customer (KYC) norms for purchase of SGBs and purchase of physical gold. You are required to provide any identification documents such as PAN or TAN, Aadhaar card, Passport, or Voter ID card. The KYC fulfillment will be carried out at the issuing bank, post office or by the agent.

• Is it possible to purchase 500 grams in the name of my family members to increase my investment?

  Yes, you can buy bonds in the name of your family members as long as they meet the eligibility criteria and KYC requirements.

• Can I buy 500 grams worth of SGBs every fiscal year?

  Yes, you are allowed to buy the maximum limit of SGBs every fiscal year. The limit is only on a yearly basis.

• If I purchase the bonds through Exchanges, will the limit of 500 grams of gold still apply?

  Yes, the limit will apply even if the bond is bought through the exchange.

• What is the interest rate offered on SGBs and how will it be paid?

  The rate of interest offered is fixed 2.50% p.a. on the initial investment. Interest is paid every 6 months directly to the bank account. The last installment of interest is paid along with the maturity value.

• Who is authorised to sell SGBs?

  Scheduled commercial banks and designated Post Offices are authorised to sell SGBs directly or through their agents like NSC, NBFC agents, etc.

• Do I have to purchase SGBs through my own bank?

  You can purchase the SGBs from any bank or post office. It is not required to purchase the SGBs only from the bank at which you hold an account.

• I have applied for SGBs, does this mean I am assured of allotment?

  Once you have applied for the SGB, if you fulfill the eligibility criteria, provide a valid identification document and remit the application money on time, you will receive your allotment.

• When will I receive my SGB Holding Certificate?

  On the date of issuance of the SGB, the Certificate of Holding will be issued. You can collect it from the issuing bank, post office or agent. You can also get the certificate from directly from the RBI or through email, if you provided an email address in your application form.

• Can I apply for the SGBS online?

  Yes. The listed scheduled commercial banks have opened facilities for customers to apply for the SGB online through their respective websites.

• What is the price of an SGB?

  The price of the SGB is based on the previous week's (Monday to Friday) simple average price of gold that will be published by the Indian Bullion and Jewellers Association Ltd. The price is declared in Indian Rupees on 999 purity of gold.

• Will the rate of gold applicable be published by the RBI every day?

  The RBI will publish the price of gold for the relevant tranche on its website two days before the SGB issue opens.

• What is the benefit of the SGB upon redemption?

  On the maturity date, you will receive the prevailing market value of grams of gold initially invested (In Indian Rupees) and Last installment of interest earned on the initial investment. The redemption price will also be based on simple average of previous week's (Monday to Friday) price of closing gold price for 999 purity published by the IBJA.

• How will the redemption amount be given to me?

  Redemption benefit will be directly credited to your bank account - the details of which you provided at the time of purchasing the SGB.

• What is the process for redeeming the SGB?
  1. One month before the SGB matures, you will be informed.
  2. If you have any changes that need to be made such as your bank account details, email ID and so on, that could affect your payment, you need to inform your bank or post office as soon as possible.
  3. On the date of maturity, the benefit will be paid directly to your bank account which is on record.
• Can I redeem the SGB before the maturity date?

  Premature redemption and encashment is allowed after the fifth year from the issue date of the SGB or the coupon payment date. You can also trade your bond - if it is held in demat form - on the Exchanges. You are also allowed to transfer the bond to any other person who meets the eligibility criteria.

• What is the process for premature redemption of the SGB?

  If you wish to make a prematurely redemption, you need to approach the concerned bank, post office or agent 30 days prior to the coupon payment date. Your request will be entertained only if you approach the bank, agent or post office at least 1 day ahead of the coupon payment date. Once you have made your request, the proceeds will be directly credited to your bank account on record.

• Am I allowed to gift an SGB to a relative or friend?

  Yes, you can buy a bond at the time of its issue in the name of a family member. You can also transfer the bond to a friend or relative at any time as long as the transferee meets the eligibility criteria.

• Can I offer SGBs as collateral for loans?

  Yes, for loans from banks, financial Institutions and Non-Banking Financial Companies (NBFC), SGBs are eligible to be used as collateral. The Loan to Value ratio will remain the same as for the ordinary gold loan which will be mandated by the RBI from time to time.

• Are there taxes applicable on interest and capital gains under the SGB?

  As per the provisions of the Income-tax Act, 1961(Section 43), interest earned on the bonds will be taxable. However, capital gains on redemption is exempted from tax. The indexation benefits against long-term capital gains will be provided to any person on transfer of bond.

• Is there TDS (tax deducted at source) applicable on the bond?

  There is no TDS applicable on the SGB. The responsibility of complying with the tax laws will be borne by the SGB holder.

• Is there a customer service to address grievances under this scheme?

  Customer services will be provided by the issuing banks, post offices or agents through which the bond was purchased. They will handle change of address, early redemption, nomination, etc.

• How do I make the payment to buy a Sovereign Gold Bond?

  Payment can be made through the Cash, Cheques, Demand draft and Electronic fund transfer

• Can I nominate someone for the SGB?

  Yes, you can nominate someone by filling out the relevant form and submitting it along the application form. Nomination facility will be carried out as per the provisions of the Government Securities Act 2006 and Government Securities Regulations, 2007.

• What is the maximum limit of SGB in case of joint holding?

  The maximum limit for joint holding is not specified. The limit of 500 grams of gold is applicable to the first applicant.

• Can institutions or companies invest in Sovereign Gold Bonds?

  There is no restriction on banks or institutions investing in SGBs. The SGB will qualify for SLR.

• Can I apply for the bonds in demat form?

  Yes, the bonds can be held in demat account or converted at any time later.

• Where can I trade these bonds?

  From a date that will be decided on by the RBI, you will be allowed to trade the SGBs on stock exchanges/NDS-OM. As per the Government Securities Act, the bonds can be sold and transferred.

• Can I apply for part repayment of SGBs?

  Yes, you can redeem part holdings in multiples of one gram at the time of exercising the put option.

About the Author

Anni Jangam

Annie Jangam is a financial writer with a unique background in biotechnology and eight years of genomics research experience, culminating in 6 international publications. Her three-year experience in SEO-based content writing spans diverse topics. She combines her analytical skills with a talent for clear communication to simplify complex financial concepts. She delivers informative, engaging content with scientific precision and creative flair in the fintech industry. She covers various financial products such as banking, insurance, credit cards, tax, commodities, and more. Her research background demonstrates her dedication, attention to detail, and problem-solving skills, making her a valuable asset in the data-centric world of fintech.