The Finance ministry in coordination with RBI has introduced the seventh series of the Sovereign Gold Bond Scheme (SGBS) for 2016-17. The scheme is currently open for subscription and closes on March 3.
The previous tranches of SGBSs have been largely successful in the market, with many preferring them to gold ETFs.
IFAs registered on stock exchange platforms like NSE NMF II and BSE Star MF can earn a healthy commission up to 1% on sovereign gold bonds (SGBS).
In a press release, the Ministry of Finance has said, “Commission for distribution of the bond shall be paid at the rate of 1% of the total subscription received by the receiving offices and such offices shall share at least 50% of the commission so received with the agents or sub agents for the business procured through them.”
While BSE Star MF is passing on the entire 1% commission to distributors, NSE NMFII is offering 99 basis points as commission.
Omkeshwar Singh, Head – Mutual Funds, BSE said, “We are expecting a trade of 5 to 10 Kgs in this series. So far, we have received good response from the investors and are hoping to gain traction in the days to come.”
SGBS will be issued in denominations of 1 gram of gold. An individual cannot buy more than 500 grams of gold bonds per year. This translates to a maximum investment of Rs. 15.07 lakh a year at today’s cost (price of 10gm of gold is Rs. 30,150 as on February 28, 2017).
These bonds will have a maturity period of eight years with a lock in period of five years. Apart from this, investors will get an indicative return of 2.5% per annum along with the mark-to-market loss or gain.
In order to provide liquidity, the government has recently allowed the listing of these bonds on commodity exchange platforms, which means that it can be traded on these platforms.
