A lot of people invest in RBI’s Sovereign Gold Bond Scheme via banks like, ICICI Bank and other platforms such as Zerodha.
What happens is there are two scenarios:
- You get a confirmation receipt and an SGB investment certificate.
- You get a confirmation receipt but you don’t get the investment certificate.
You don’t get an SGB certificate when you invest via a Demat account and opt to hold the SGB on the exchange.
Because the ownership is interchangeable in this case.
Just the way you can sell a stock or ETF on BSE and NSE exchange, you can now trade SGB as well. This can only happen when you opt to hold your SGB investment under your Demat account as a holding on the stock market exchange.
When you purchase SGB through a bank, such as ICICI, you get an option to provide your Demat account’s DP id.
The DP id can be found by logging into your Console account. Then navigate to Console>Profile>Demat information.
Your DP id is used to link your SGB to your Demat account so you can trade it whenever you want.
But note that the transactions of SGBs are not as active as stocks and ETFs. You might not be able to sell them when you need them the most.
There always has to be an active buyer for any asset – the same goes for SGBs.
So, should you hold SGB on exchange as a holding?
The advantage is you can sell the SGB before the maturity date in the market. Also, you still earn an interest rate of 2.5% per annum.
The disadvantage is – nothing. Even if you aren’t able to sell it, you will still get the interest and when the bond matures, it will be automatically redeemed.
When you don’t opt to hold the SGBs under your Demat account, you will receive both the transaction confirmation receipt and the Sovereign Gold Bond issuance certificate.
Hope this guide helped you.
If you’ve any questions, let me know in the comments.
I invested in gold bond on June 24th, issue date was 28th June. I purchased through ICICI bank and gave dp id of zerodha. It is July 20th now. Still it is not listed in my demat. Is it something to worry?
If you submitted the correct ID, I wouldn’t worry. If not, you need to get in touch with the bank and your Demat depo.