Can NRI Buy Sovereign Gold Bonds - A Comprehensive Guide

NRIs can indeed buy Sovereign Gold Bonds, but there are some eligibility criteria to keep in mind.

The Reserve Bank of India (RBI) allows NRIs to invest in Sovereign Gold Bonds, but they must have a valid PAN card and a foreign bank account.

To be eligible, NRIs must also have a savings bank account in India or a demat account with a participant bank.

Sovereign Gold Bonds, or SGBs, are a financial instrument issued by the Government of India, making them an attractive alternative to investing in physical gold. They offer a way to hold gold in paper form, eliminating storage risks and costs.

Only Indian nationals and Hindu Unified Families (HUF) can participate in sovereign gold bond schemes, as per the RBI's eligibility criteria. This means that NRIs cannot directly invest in SGBs.

The minimum investment in SGBs is the prevailing price of one gram of gold, making it a low-cost entry point for investors. You can buy SGBs in grams or kilograms of gold, with a minimum of 1 gram and a maximum of 4kg for individuals and HUFs.

The bonds come with a lock-in period of 8 years, but you can prematurely redeem the amount after completion of 5 years. This means you can exit the investment after 5 years, but you'll have to wait for 8 years to get the full maturity price.

Here are some key features of SGBs:

SGBs offer a range of benefits, including no storage risks and costs, low risk, and payment in market price. They also provide no making charges and no tax on capital gains, making them an attractive option for investors.

Indian residents can buy sovereign gold bonds, and they can be subscribed on behalf of a minor.

The RBI has specified certain entities that are eligible to buy sovereign gold bonds, including individuals, Hindu Undivided Families, Trusts, charitable organisations, and universities.

Here's a list of eligible entities:

Note that NRIs, PIOs, OCIs, and entities like Firms, LLPs, and private limited companies are not eligible to buy sovereign gold bonds.

Sovereign gold bonds are a safe and secure investment option for NRIs, backed by the Indian government.

With sovereign gold bonds, you don't have to worry about storage risks and costs, as the risks and costs of storage are eliminated.

Low risk is another advantage of sovereign gold bonds, as the RBI issues these bonds on behalf of the government, making them safer than purchasing actual gold.

You can withdraw your bond, either upon maturity or prematurely, and get the current market price.

No making charges are applicable when you buy sovereign gold bonds, unlike when you buy gold jewellery.

The government of India has exempted the tax on capital gains for purchase of gold if you invest in a sovereign gold bond.

Here are some key features of sovereign gold bonds:

The RBI determines the interest rate, which will be paid to you twice a year on the amount of your initial investment.

You can invest in sovereign gold bonds in grams or kilograms of gold, with a minimum investment of 1 gram and a maximum limit of 4kg for individuals and 20kg for corporations and trusts.

The tenure of sovereign gold bonds is usually 8 years, with an option to withdraw prematurely after the 5th year.

Upon maturity, the sovereign gold bond will be redeemed and given to you in cash, based on the simple average of the closing price of gold of 999 purity of the previous three business days from the date of repayment.

If you're an NRI looking to buy Sovereign Gold Bonds, you're in luck - there are several ways to do so. You can invest in SGBs online by logging in to your bank's internet banking portal or mobile banking application.

You can also buy SGBs from your nearest bank branch or post office. This is a great option if you prefer to deal with a physical location and get a paper receipt for your investment. Another option is to purchase SGBs directly from the 'RBI Retail Direct' website.

The Stock Holding Corporation of India Limited (SHCIL) also allows you to invest in SGBs. And, if you're feeling adventurous, you can even buy SGBs from any recognized stock exchange, such as the National Stock Exchange of India or the Bombay Stock Exchange.

Here are the different ways to buy SGBs:

The limits for investing in Sovereign Gold Bonds are quite straightforward. The minimum investment is just one gram of gold at the prevailing gold rate prescribed by the RBI.

Individual investors and HUFs can invest up to 4 kg of gold, which is a relatively generous limit.

Charitable organisations, universities, and trusts, however, have a much higher limit of 20 kg of gold, giving them more flexibility to invest in this type of bond.