Questions about buying Sovereign Gold Bond

I admit I don’t have any prior investment experience. I am planning to buy Sovereign Gold Bond (SGB) during the next tranche. I read, but I still have some doubts. If you are familiar with SGB or have SGB experience, could you please help me? Kindly appreciate your answers. Thank you.

  1. I want to buy SGB online in order to take advantage of the Rs50/g discount. Must I open an online trading account first? Is Demat the only issuance form if I buy SGB online? I don’t plan on other investment activities. Is there a way to avoid demat account and other account maintenance fees? Or could you recommend an easy-to-use online platform and account with minimal or zero fee? How long does it usually take to set up an online account? I want to make sure the account is ready before the next tranche opens. I currently bank with HDFC and ICICI if this matters.

  2. Other than online, can I also buy SGB from any bank or post office? Is it still required to open a trading account? Can I just go directly to the bank/post office on any issue day and finish the purchase transaction in the same day?

  3. Will I be guaranteed to buy SGB at the issue price? If there is too much demand, will it cause the purchase price to increase above the issue price? Except the 1% commission fee, are bank/agent allowed charge more fees?

  4. Is there a national quota on the total amount of issuing SGB in each tranche? Is it possible all SGB are quickly sold out before the end of the tranche period? Any need to hurry?

  5. After 8-year maturity period is over, must I redeem SGB immediately, or can I keep SGB in my account and redeem it later? What will be the redemption price if I redeem it later?

  1. No, you can get physical allotment certificates. I use Zerodha, they are the cheapest, I think!
    Contact your bank in advance for the netbanking service
  2. No, you can buy directly from bank & post office
  3. The price is fixed, its the average GOLD price of the last 3 days -50 Rs as discount.
  4. There always is a quota on the max SBG that will be allotted in a tranche
  5. I guess redemption has to with tax benefits, you can redeem it anytime after 5 years, if you do it after 8, the profits are non taxable

Thank you for your reply.

As far as you know, are there usually sufficient quota of SGB so that it will usually still be available at least during the first two or three issue days? Since this is the first time I am buying it, I want to make sure I have reasonable time to figure out the process and buy SGB.

I am also interested in starting to use Zerodha. Can you please teach me what are all the types of accounts I must set up in Zerodha in order to buy SGB? How many days will Zerodha account setup take? How do I transfer funds between my own bank HDFC and Zerodha accounts? How many days will fund transfer from HDFC to Zerodha take? Is it possible to buy SGB through Zerodha but in physical (non-Demat) mode? What are the benefits to hold in Demat form? Can I sell SGB at any time (even before 5th year) if it is in Demat format? From which account will Zerodha deduct AMC and other charges?

One more question, according to, it says “Your order will be placed on the exchange (NSE/BSE) at the end of the subscription period. Ensure to keep sufficient balance in your Equity account on the last day of the issue. Credit from stocks sold on the closing day of the issue will not be considered towards the purchase of the ETFs and SGB.”

Why will my order be placed at the end of the subscription period rather than immediately? If so, how do I know for sure whether I can get SGB given there is a limited quota?