Frequently Asked Questions (FAQs)
Sovereign Gold Bond Scheme
1. What is Sovereign Gold Bond (SGB)? Who is the issuer?
SGBs are government securities denominated in grams of gold. They are substitutes for
holding physical gold. Investors have to pay the issue price in cash and the bonds will be
redeemed in cash on maturity. The Bond is issued by Reserve Bank on behalf of
Government of India.
2. Why should I buy SGB rather than physical gold? What are the benefits?
The quantity of gold for which the investor pays is protected, since he receives the ongoing
market price at the time of redemption/ premature redemption. The SGB offers a superior
alternative to holding gold in physical form. The risks and costs of storage are eliminated.
Investors are assured of the market value of gold at the time of maturity and periodical
interest. SGB is free from issues like making charges and purity in the case of gold in
jewellery form. The bonds are held in the books of the RBI or in demat form eliminating risk
of loss of scrip etc.
3. Are there any risks in investing in SGBs?
There may be a risk of capital loss if the market price of gold declines. However, the investor
does not lose in terms of the units of gold which he has paid for.
4. Who is eligible to invest in the SGBs?
Persons resident in India as defined under Foreign Exchange Management Act, 1999 are
eligible to invest in SGB. Hence, on www.icicidirect.com only resident individuals and HUFs
would be allowed to invest in SGBs. Other client categories like corporate, partnership firms,
LLPs, trusts, etc. would not be allowed to invest.
5. Whether joint holding will be allowed?
The joint holders if any in the linked demat account would also be joint holders for
investment in SGB. For investment account holders without demat account, only single
holder option would be available.
6. How can investors invest in the SGB ?
Investors can apply for the SGB online post login to their ICICIdirect.com account.