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Sovereign Gold Bond

Government of India — via RBI Retail Direct · Government Bonds & Fixed-Income

A government bond denominated in grams of gold, issued in tranches, paying a small fixed interest on top of the gold price.

Terms set by notification Not published as a number here — it varies by provider, tenure or plan.

The RBI's page for the scheme, with tranche dates, issue price and redemption rules.

Check the official page

Source RBI — Sovereign Gold Bond

www.rbi.org.in

The RBI's page for the scheme, with tranche dates, issue price and redemption rules.

How it works

Sovereign Gold Bond is a bonds & fixed income product from Government of India — via RBI Retail Direct, in the conditional category: depends on terms being met. A government bond denominated in grams of gold, issued in tranches, paying a small fixed interest on top of the gold price.

Because the return type is conditional, the questions that matter most are: Which conditions have to be true for me to get the stated return? What do I get if those conditions are not met?

  • Holding gold without storage costs
  • A hedge alongside equity

Key facts

Provider
Government of India — via RBI Retail Direct
Source
RBI — Sovereign Gold Bond ↗ https://www.rbi.org.in
Rate
Terms set by notification ↗
Category
Government Bonds & Fixed-Income
Minimum investment
₹10,000 roughly one gram, priced per tranche
Tenure
8 years
Payout
Half-yearly interest, principal in gold at maturity
Eligibility
Resident individuals, with limits on how much one person may hold per year.
Getting your money back
Tradable on the exchange after the lock-in; early redemption allowed after five years on interest-payment dates.
Protection
The 2.5% coupon is fixed by the issuer, but the redemption value follows the gold price, so the capital is not protected. Government of India is the counterparty for the coupon and the redemption price.
Tax
Interest is taxable. Redemption at maturity is generally exempt from capital gains; an early sale is not.

What can go wrong

  • Redemption value follows the gold price, so you can get back less than you paid.
  • The fixed coupon is small; most of the return is gold price movement.
  • New tranches open only in RBI's issuance windows.

Before you decide anything

  • Whether a tranche is currently open
  • The issue price and the holding limits

These are questions to take to the provider, not a checklist that makes a product suitable. Whether something fits your situation is a decision only you — or an adviser you choose — can make.

Official sources

These link to the regulator or provider where the rules for this type of product are set out. They are the pages worth checking before you act, because they are the ones that get updated.

Other products in this category

The same rules and the same kind of trade-offs, described the same way.