Step-by-step guide on how to buy Sovereign Gold Bonds (SGBs) from the stock market

Persons resident in India as defined under Foreign Exchange Management Act, 1999 are eligible to invest in SGB. Eligible investors include individuals, HUFs, trusts, universities and charitable institutions. Individual investors with subsequent change in residential status from resident to non-resident may continue to hold SGB till early redemption/maturity.

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To buy SGBs through the stock market, kindly follow the mentioned steps:
Step 1: You can find the discounted SGB/high-yielding SGB on NSE or BSE>
Step 2: Search the SGB scrip code in your demat account and place a buy order.
Step 3: The bonds will be credited to your demat account within T+1 working day of the transaction.

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The bonds are tradable from a date to be notified by RBI. (It may be noted that only bonds held in de-mat form with depositories can be traded in stock exchanges) The bonds can also be sold and transferred as per provisions of Government Securities Act, 2006. Partial transfer of bonds is also possible.

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Participants can choose between Depository Mode and Physical mode to place the bid on behalf of their investors. In case of Depository Mode, RBI will credit the Gold Bonds to the Client’s demat account. In case of Physical Mode, RBI will issue a physical Gold Bond Certificate to the clients.

The term of an SGB is eight years. Investors who bought SGBs earlier may find not be able to hold the bonds for the entire eight-year tenure. These individuals use exchanges to sell the assets they own (much like with stocks).

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Though the tenor of the bond is 8 years, early encashment/redemption of the bond is allowed after fifth year from the date of issue on coupon payment dates. The bond will be tradable on Exchanges, if held in demat form. It can also be transferred to any other eligible investor.

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