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How to Invest in Sovereign Gold Bonds (SGB) Online With Canara Bank Netbanking

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Canara Bank netbanking page

Canara Bank netbanking page

What Makes SGB an Attractive Investment Mode?

The government of India (GOI) has come up with a number of progressive schemes for investors. One such scheme is sovereign gold bonds (SGB), where Indian residents can buy pure gold in the form of bonds digitally while earning an interest of around 2.5% annually.

Though jewelry is a beloved mode of investment for many Indians, it is not considered the best as it has made charges. For the same reason, Indians prefer to buy gold bars and coins because of negligible making charges, plus you get gold in its purest form. It can be liquidated during emergencies, act as a hedge against inflation, or be stored away safely to be passed down as an inheritance.

However, with physical gold, there's always a concern for storage and security. Investors can also choose gold ETFs and gold mutual funds as alternatives, but there are market risks associated with such products. Other forms of gold, like digital gold, don't require physical storage but are not yet regulated by the government. This is where SGB comes in. It is considered a safer bet as the government of India backs it.

This page shows you how to easily invest in SGB using Canara Bank's netbanking service.

Basic Details

Investors need to keep the following points in mind before subscribing to SGB:

  • Subscription is open in tranches on dates announced by the government. Keep an eye out for them!
  • The tenor is eight years, with an exit option available after the 5th year.
  • The minimum investment is 1 gram, and the maximum is 4 kg for individuals.
  • Investors will receive an interest of 2.5% annually. The interest is semi-annually credited to bank accounts.

Required Documents

No documents are required for buying SGB online through Canara Bank netbanking.

Steps to Register for SGB Online in Canara Bank

The following steps can be carried out only if the SGB subscription is open:

  1. Log in to your netbanking account.
  2. Click on the Government Schemes tab. A list of government schemes is shown to the left of the screen.
  3. Scroll down and select the Sovereign Gold Bond (SGB) option.
  4. Select the Click here to apply for Sovereign Gold Bond (SGB) button. You will be redirected to a screen outside the Canara Bank Netbanking page. If SGB is open, you are shown a screen with instructions.
  5. Read through all instructions carefully and click on Subscribe.
  6. Select the mode of holding as Single and the investor category as Citizen.
  7. Choose the bank branch. You can choose any bank branch. It is not mandatory to buy SGB from your home branch.
  8. Enter the number of grams you wish to purchase. The minimum requirement is one gram.
  9. Click on Submit.
  10. Proceed to enter your net banking account details again.
  11. A form is then displayed with details automatically fetched from your bank account. You will need to add the nominee details manually.
  12. You can enter your DP ID and Client ID if you have a Demat account. When held in Demat form, the bond can be traded on exchanges. This is optional.
  13. You will then be required to log in again. The amount will be automatically calculated, and you can proceed to make the payment.
  14. A receipt is then generated and emailed to you.
  15. Sovereign Gold Bonds (SGBs) are generally allotted within 7 days after the subscription closes. You will get an email with the subscription certificate.

Note: The SGB issue price is Rs. 50 per gram lesser than the actual value if subscribed online.

Timeline and Redemption

I registered for SGB online through Canara Bank netbanking and was allotted the subscription units in seven working days.

If the investor meets all criteria and submits all required information correctly, then an allotment is assured. I got the certificate through email.

You can download and store/print the certificate for future reference. After eight years, i.e., upon maturity, the redemption amount will automatically be credited to your registered bank account.

As per the Reserve Bank of India (RBI), "On maturity, the Gold Bonds shall be redeemed in Indian Rupees, and the redemption price shall be based on a simple average of the closing price of gold of 999 purity of previous 3 business days from the date of repayment, published by the India Bullion and Jewelers Association Limited."

Risks

Is SGB entirely risk-free? Though SGB is a safe investment method, it is not without risks as it depends on gold's market value. If the gold rate depreciates, so will your SGB value.

Conclusion

If you wish to invest in gold, SGB is arguably the best method in India as it does not include making charges.

The downside is that SGB cannot be passed down physically to your loved ones like other forms of gold, so it serves strictly as an investment mode only. If you wish to physically hand over gold (heritage pieces, keepsake, etc.), then jewelry is the way to go.

References

This article is accurate and true to the best of the author’s knowledge. Content is for informational or entertainment purposes only and does not substitute for personal counsel or professional advice in business, financial, legal, or technical matters.

© 2022 Kalpana Iyer