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RBI, the Government has decided to issue new Sovereign Gold Bonds (SGBs) in tranches

Published on December 11, 2023
Current Context: The Government of India, in consultation with the Reserve Bank of India (RBI), has decided to issue Sovereign Gold Bonds (SGBs) in tranches.
  • The features of the SGBs are as follows:
    • Product name: Sovereign Gold Bond Scheme 2023-24
    • Issuance: To be issued by the RBI on behalf of the Government of India.
    • Eligibility: The SGBs will be restricted for sale to resident individuals, HUFs, Trusts, Universities, and Charitable Institutions.
    • Denomination: The SGBs will be denominated in multiples of gram(s) of gold with a basic unit of One gram.
    • Tenor: The tenor of the SGB will be for a period of eight years with an option of premature redemption after the 5th year to be exercised on the date on which interest is payable.
    • Minimum size: Minimum permissible investment will be One gram of gold.
    • Maximum limit: The maximum limit of subscription shall be 4 Kg for an individual, 4 Kg for HUF, and 20 Kg for trusts and similar entities per fiscal year (April-March).
    • Joint holder: In case of joint holding, the investment limit of 4 Kg will be applied to the first applicant only.
    • Issue price: Price of SGB will be fixed in Indian Rupees on the basis of a simple average of the closing price of gold of 999 purity, published by the India Bullion and Jewellers Association Limited (IBJA) for the last three working days of the week preceding the subscription period. The issue price of the SGBs will be less by ₹50 per gram for the investors who subscribe online and pay through digital mode.
    • Payment option: Payment for the SGBs will be through cash payment (upto a maximum of ₹20,000) or demand draft or cheque or electronic banking.
    • Issuance form: The SGBs will be issued as Government of India Stock under the Government Securities Act, 2006. The investors will be issued a Certificate of Holding for the same. The SGBs will be eligible for conversion into demat form.
    • Redemption price: The redemption price will be in Indian Rupees based on a simple average of the closing price of gold of 999 purity, of the previous three working days published by IBJA Ltd.
  • The date for subscription for 2023–24 Series III is December 18–22, 2023, while Series IV is scheduled for February 12–16, 2024.
  • The investors will receive an interest rate of 2.50 per cent per annum payable semi-annually on the nominal value.
  • No capital gains tax has to be paid if redemption is done after maturity.

Question:

Q.1 What is the tenor of the SGB?
a. Five years
b. Eight years
c. Ten years
d. Twelve years

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