What are Sovereign Gold Bonds?
Sovereign Gold Bonds (SGBs) are government securities denominated in grams of gold. They are issued by the Reserve Bank of India (RBI) on behalf of the Government of India. SGBs were introduced as a means for investors to invest in gold in a more regulated and transparent manner compared to physical gold. Sovereign Gold Bonds offer investors the opportunity to earn returns linked to the price of gold, along with the security and liquidity associated with government securities. They are suitable for investors looking for diversification with exposure to gold while earning a fixed rate of interest.
- SGBs are issued in denominations of grams of gold, typically ranging from 1 gram to 100 grams.
- SGBs offer a fixed rate of interest payable semi-annually. The interest rate is determined by the government and is typically lower than other fixed-income investments.
- SGBs have a maturity period of 8 years, with an option to exit after the fifth year on interest payment dates.