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How to Invest in Gold Bonds online without Demat Account

invest in sovereign gold bond without demat account

We Indians love gold. The demand for gold soars during the festival and weeding season. Gold in India is not just used as jewellery, many people invest in physical gold. There are better ways to invest in gold. Sovereign gold bond(SGB) is one of the best ways to take exposure in gold. You can buy sovereign gold bond online through your savings account’s net banking platform or mobile banking without a demat account.

Gold is considered as a safe haven asset. The gold price increases during uncertain times such as slowing global economic growth rate, trade wars, and political unrest.

In this article, we will know all about sovereign gold bond and how you can buy sovereign gold bond online.

What is Sovereign Gold Bond (SGB)?

Sovereign Gold Bond (SGB) is a non-physical way to invest in gold. Investors can hold gold bonds in demat, physical or e-certifcate format. RBI on behalf of government of India issue Sovereign Gold Bond. Each bond represents one gram of gold of 999 purity. The price of the bonds reflects the current price of gold.

The redemption price will be the simple average of gold in the last 3 business days. The price of 999 purity gold published by India Bullion and Jewelers Association Limited is considered.

Currently, sovereign gold bond is open for subscription from August 31 to September 4, 2020. The bonds will be issued on 8th September, 2020.

What are the features and benefits of Sovereign Gold Bond?

benefits of sovereign gold bond
Benefits of Sovereign gold bond

Safe Investment option: Sovereign Gold Bond is a safe way to invest in gold as it is backed by the government of India. As it is not physical gold, risks associated with traditional gold jewellery is absent.

Returns/Interest rates: Sovereign gold bond tracks the price of gold. So, when the bonds mature, you will get proceeds equal to the prevailing gold price. You will also a fixed annual interest of 2.5% on the bonds that will be paid on a half-yearly basis.     

Investment period: The tenure of the bonds is 8 years. However, you have the option to exit from the 5th year onwards. Early exit is available for investors who have invested through their demant account.

Denomination: The bonds are denominated in units of one gram of gold.

Minimum and maximum limit: The minimum investment size is 1 gram of gold and maximum investment limit varies among the different classes of investors. The maximum limit for subscription for individuals and Hindu Undivided Family (HUF) is 4 kg i.e. 4000 units. The maximum investment limit for trusts and other such entities is 20 kgs.   

Things to keep in mind before buying Sovereign Gold Bond online 

  • Investors can buy Sovereign Gold Bond from the primary market when the government opens a window every two to three months. The issue window remains open for a week. So you need to plan for your online purchase of your sovereign gold bond according to the schedule.
  • Customers who buy gold bond online get a discount of Rs.50 per gram. So, the issue price of the bond for online investors is Rs.5,067 per gram of gold.
  • Gold is the underlying investment option for SGBs and is linked to the market. The amount of proceeds that you will get after maturity depends on the gold rates at the time of maturity.
  • Sovereign gold bond is tax free at maturity. It gives sovereign gold bond an advantage over investment options such as gold ETF or gold mutual funds.
  • The investment period of the bond is 8 years and investors can exit after five years.
  • Selling your units in the secondary market may or may not lead to gains. You may not find enough buyers in the secondary market.
  • Once the bonds mature, reinvesting the proceeds is limited. Issues of sovereign gold bonds may not be available for subscription.   

How to Buy Sovereign Gold Bond Online

There are various ways to buy sovereign gold bond. You can buy sovereign gold bond by visiting a post office or your banks, stock exchanges such as BSE and NSE, and the Stock Holding Corporation. You can easily buy sovereign gold bond online by logging in to the net banking platform of your bank.

Here we will see how you can buy sovereign gold bond online.

Sovereign Gold Bond –Kotak Mahindra Bank

Kotak customers including Kotak 811 Full KYC customers can invest in gold bond schemes through net banking and mobile banking app.

Kotak Net Banking

  • Log in to Kotak Net Banking with your log-in details.  
  • Click on the ASBA tab at the top.
  • Click on ‘Apply for sovereign bonds’ available on the left side.  
  • Choose your bond delivery option, depository participant, select your account number and accept the terms and conditions. Click on ‘Next’.
  • You can see the details such as issue price. Enter the number of units that you want to invest and click on ‘Next’.  
  • Verify your details and click on ‘Confirm and submit’.
  • In the next screen, you get a notification stating that the application is successful. Keep your reference number handy for future.   

Kotak Mobile Banking

  • Click on Sovereign Gold Bond in the banking menu
  • Click on ‘Apply for Sovereign Gold Bond’
  • In the next window, enter the number of units, select the bond delivery type as physical(if you don’t have demat account), select the funding account, add your nominee details and tap on ‘Proceed’.
  • Review your application details and click on ‘Confirm’.

Your sovereign gold application is now placed. Keep your application id safely for future reference.

Sovereign Gold Bond – SBI

SBI account holders who haven’t applied for sovereign gold bond through SBI net banking has to register.

  • Log in to SBI personal’s Internet Banking portal with your username and password.
  • Click on the e-Services tab.
  • Click on ‘Sovereign Gold Bond Request’ to apply for the bonds.
  • Fill the personal details.  
  • Check the details and click on ‘Confirm’.
  • You are now registered and you can click on the purchase tab to buy sovereign gold bonds online. 
  • Select the account through which you want to invest.  
  • Select the required units that you want to buy.  
  • Add your nominee details and click on ‘Submit’.  
  • Verify your details such as subscription quality, nominee details and the amount will be debited from your savings account.
  • Enter the OTP that you have got on your registered mobile number and click on ‘confirm’.   

You have applied for gold bonds. Keep the details for future reference.

HDFC Bank – Sovereign Gold Bond

HDFC Bank customers can buy sovereign gold bond online through HDFC Bank’s net banking platform.

  • Log in to HDFC net banking with your user ID and password.
  • Click on the Demat tab.
  • Click on Sovereign Gold Bond.  
  • Fill in the basic details such as personal details and units of bonds that you want to invest. Add nominee details.  
  • Click on ‘Generate OTP’.
  • Add the OTP that you have received on your registered mobile number.

You have successfully applied. You will see details in the next screen. Keep a note of the details to avoid any inconvenience in the future.

ICICI Bank – Gold Bonds

  • Log on to your ICICI Bank’s internet banking with your login credentials
  • Tap on Investments & Insurance.
  • Click on invest Online.
  • Click on ‘Apply now’ in the Sovereign Gold Bond section.
  • Fill in your investment details and personal details.

In the next screen, you will get the confirmation of your application. Save the service request number for future reference.

FAQs on Sovereign Gold Bond

Is Sovereign Gold Bond a good investment?

Sovereign Gold Bond can act as a hedge instrument in your investment portfolio. It is a low risk investment option. Other than the gold returns, customers will also receive a fixed interest rate of 2.5% bi-annually.

Is demat account required for Sovereign Gold Bond?

Demat account is not required to invest in sovereign bonds. Physical and e-certificates will be provided to customers who don’t have a demat account.

Is Sovereign Gold Bond tax free?

Sovereign gold bond is tax free at maturity. However, in case of transfer, the tax on capital gains will be applicable as per the IT Act, 1961

Are there any risks in investing in SGBs?

The decline in gold prices is the risk in investing in sovereign gold bonds.

Can I buy Sovereign Gold Bond anytime?

Government opens subscription window every 2-3 months. It remains open for about a week.

Can I convert Sovereign Gold Bond to physical gold?

Sovereign Gold Bond allows you to take part in the movement of the gold prices. You cannot convert sovereign gold into physical gold. It is for your investment needs.

Can I buy Sovereign Gold Bond online?

You can buy sovereign gold bond online through your bank’s net banking portal. The investment amount is debited from the account directly.

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