BSE, formerly Bombay Stock Exchange, has announced the commencement in trading of sovereign gold bonds (SGB) on its platform from Monday, 13 June, enabling investors to diversify their portfolio without the need to buy the metal in its physical form.
The SGBs will be traded under the “G” Group of Equity Cash Segment of BSE, along with other government securities available for trading and settled on T+2 basis in the demat account of the investor.
Sovereign Gold Bonds will be issued by the Reserve Bank of India (RBI) on behalf of the government of India. Investors already registered with BSE can start investing directly in the SGBs through their brokers, without the need of any additional documentation.
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The minimum investment size in the secondary market will be as low as 1 gm while the tenure of the bond is eight years with an exit option from the fifth year to be exercised on the interest payment dates.
The bonds will carry an interest rate of 2.75% (fixed rate) a year on the amount of initial investment. Interest will be paid half-yearly with the last interest being payable on maturity.
The Sovereign Gold Bond Scheme was announced by the government of India in October, 2015. The first tranche will now be available for trading. The RBI has also appointed BSE as the ‘Receiving Office’ for collecting subscription bids from investors for primary issuance of SGBs from the next tranche onwards.