Eligibility for Sovereign Gold Bonds: Who Can Apply and Why It Matters

Sujeet Kushwaha

Sovereign Gold Bonds (SGBs) offered by the Reserve Bank of India present a unique opportunity to invest in gold in paperless form.

With multiple benefits like fixed interest payouts, tax breaks, and redemption linked to gold prices, SGBs allow Indian residents to reap superior returns compared to physical gold.

The eligibility criteria for investing in SGB schemes are straightforward and inclusive of a wide range of Indian residents. If you fall into any of the below categories, you can readily apply for purchasing the bonds.




Resident Individuals

Any resident Indian individual who meets the prescribed Know Your Customer (KYC) documentation requirements can invest in SGBs. It makes the bonds easily accessible to common retail investors across the country looking to add the stability of gold to their investment portfolios.

The minimum and maximum investment allowed for individuals is 1 gram and 4 kg gold per fiscal year. The bonds are issued in denominations of 1 gram of gold and integral multiples thereof to provide flexibility.

Individuals can optimize their capital allocation into SGBs based on investment objectives, time horizons and risk tolerance levels.

Resident Individuals Investing On Behalf Of Minors

Resident Indian individuals can also purchase Sovereign Gold Bonds on behalf of minors under their legal guardianship. It allows you to plan for your child’s long-term financial needs by building an asset that potentially appreciates in value over time.

The documents needed to apply for minor accounts are simplified to only the minor’s birth certificate and guardian’s KYC documents. It makes the process seamless for investing the funds gifted to or inherited by your child during special occasions in SGBs.

Hindu Undivided Families

Hindu Undivided Families (HUFs) as entities can apply for Sovereign Gold Bonds, allowing the joint Hindu family fund to allocate towards gold-backed securities providing stable returns.

It can facilitate succession planning and distribute inheritance in a structured manner among the coparceners.

The maximum subscription limit for HUFs mirrors that of individual investors at 4 kg gold per fiscal year. The karta of the HUF submits the application using the same simplified KYC process.

Clubbing the investments provides economies of scale and may offer better redemption value.

Read More: Invest in Gold from the Comfort of Your Home with Sovereign Gold Bonds

Trusts, Universities And Charitable Institutions

Trusts created and registered under the Indian Trusts Act, 1882, universities established under Central or State legislations and charitable institutions are also eligible to apply for Sovereign Gold Bonds.

It allows them to park funds not immediately required for operational expenses into SGBs and earn periodic interest payouts through the tenure.

Since such entities handle significant capital and have long-term financial planning horizons, allocating funds into Sovereign Gold Bonds aligns with their requirement for safe investments. The minimum investment is 1 gram, while the maximum is 500 grams per fiscal year.

PAN Card Issued By Income Tax Department Mandatory

The final eligibility criterion uniformly applicable to all above-mentioned categories is the requirement for a valid Indian PAN Card. It is essential for the Know Your Customer verification process before any application for Sovereign Gold Bonds is accepted.

So, ensure that you have an active 10-digit alpha-numeric PAN issued by the Income Tax Department in your name. You can then seamlessly apply for investing in Sovereign Gold Bonds within the specified tranche subscription periods.

The Bottom Line

Sovereign Gold Bonds offer an efficient means to add the golden touch to your investment portfolio if you are an Indian resident.

With nationalized banks, designated post offices, stock exchanges and recognized brokers accepting applications, the enrollment process is straightforward.

The 2.5% fixed interest payouts along with elimination of storage hassles provides gold-linked returns in paperless form through the tenure. So, if eligible, make sure to grab these Gold Bonds now!

Share This Article
Leveraging his government experience, Sujeet brings valuable insight on the stock market to ModernAgeBank.com readers. His passion for analysis drives coverage of equities and the latest financial news. When he's not busy dissecting stocks, Sujeet enjoys learning about new businesses and industries.
Leave a comment