In India, most households measure the value of gold in terms of the market price and sentiments. While it is bought as an investment, many people view physical gold as a yardstick to measure one’s socio-economic background. It is no longer looked at as just a means of investment. Many people nowadays are apprehensive of possessing gold in the physical form for safety reasons. There are also other downsides to it. One of them is that when you buy gold in its physical condition, you will have to incur making and GST charges in respect of it, and over the years, you will also have to incur charges towards polishing or storage of that gold. Thus, to make buying and storage of gold hassle-free, the government launched the SGB scheme. It is a secured means of investment that is cost-effective, more guaranteed in terms of security and ensures complete transparency, i.e., it tracks the import-export value of the asset.

In simple terms, sovereign bonds are issued by RBI as government securities that are denominated in grams of gold. Hence, while purchasing these sovereign bonds, you will have to make a minimum purchase of at least 1 gram of gold, and the maximum purchase limit purchase for individuals and HUF is 4 kgs of gold while it is 20 kgs for trust small entities.

Now that you have understood the meaning of a sovereign gold bond, you may wonder how the purchase of these gold bonds takes place and how you can buy them. The process is straightforward, and any individual or person jointly, including a minor on behalf of his guardian, can invest in sovereign gold bonds. Here are how you can buy them:


  • Application: You can get an application form for investment in sovereign gold bonds at any commercial bank or your nearest post office designated by RBI. While filling out the form, you will have to submit your KYC documents and fill out the essential details. The KYC documentation involved in buying sovereign gold bonds is akin to the purchase you make for physical gold.
  • Online: Any person who wishes to invest in a sovereign gold bond can purchase through the website of any listed scheduled banks. You will have to fill out the registration form as given on their website and enter details of the subscription quantity. The advantage of buying it online is that the gold bond price will be discounted, i.e., ₹50 per gram less than the market value. The payment here towards the application fee will also be made online.
  • Demat account: You can buy sovereign gold bonds with your demat account by filling up a form that is similar to the one you have filled online while making its purchase. These gold bonds can be held in the demat form and will be tradable on Exchanges, i.e., they can be sold in the market during the bond’s tenure.

What is the tenure of sovereign gold bonds?

The term of sovereign gold bonds is eight years. However, pre-mature encashment is allowed from the 5th year onwards. Thus, there is a five-year lock-in period once you invest in them.


Today people prefer buying gold in its digital form. The advantage of buying sovereign gold bonds is not only that it proves to be cost-effective, but it also offers tax relief. If you sell the gold bonds on maturity (eight years), you get a capital gains tax exemption. In addition to the tax benefit, you will also receive an interest of 2.50% per annum on your initial purchase.


ICICI Securities Ltd.( I-Sec). Registered office of I-Sec is at ICICI Securities Ltd. – ICICI Centre, H. T. Parekh Marg, Churchgate, Mumbai – 400020, India, Tel No : 022 – 2288 2460, 022 – 2288 2470.  I-Sec is acting as a distributor to solicit bond related products. All disputes with respect to the distribution activity, would not have access to Exchange investor redressal forum or Arbitration mechanism. The contents herein above shall not be considered as an invitation or persuasion to trade or invest.  I-Sec and affiliates accept no liabilities for any loss or damage of any kind arising out of any actions taken in reliance thereon. Investments in securities market are subject to market risks, read all the related documents carefully before investing. The contents herein mentioned are solely for informational and educational purpose.