Sovereign Gold Bond: What happens when SGB investor’s resident status changes to NRI

The investor receives the current market price for the gold at the time of redemption or early redemption, thus the amount of gold for which he paid is safeguarded. Better than real gold storage, the SGB provides an excellent option. It eliminates storage-related dangers and expenses.

At the time of maturity and periodic interest, investors are guaranteed the market value of gold. Concerning the purity of gold in jewellery form, SGB is unaffected by problems such as manufacturing charges. The risk of losing scrip, etc., is eliminated because the bonds are kept in the RBI’s records or in demat form.

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Eligible investors include individuals, HUFs, trusts, universities and charitable institutions. A Non-Resident Indian cannot invest in Sovereign Gold Bonds as per the Foreign Exchange Management Act (FEMA), 1999.

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Individual investors who change their residence status from resident to non-resident may continue to hold SGB until early redemption/maturity.

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According to the RBI website, “The Bonds are issued in denominations of one gram of gold and in multiples thereof. Minimum investment in the Bond shall be one gram with a maximum limit of subscription of 4 kg for individuals, 4 kg for Hindu Undivided Family (HUF) and 20 kg for trusts and similar entities notified by the government from time to time per fiscal year (April – March). In case of joint holding, the limit applies to the first applicant. The annual ceiling will include bonds subscribed under different tranches during initial issuance by Government and those purchased from the secondary market. The ceiling on investment will not include the holdings as collateral by banks and other Financial Institutions”

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