1.About

• SGBs are government securities denominated in grams of gold. They are substitutes for holding physical gold. 
• Investors have to pay the issue price in cash and the bonds will be redeemed in cash on maturity. 
• The Bond is issued by the Reserve Bank on behalf of the Government of India.
• The quantity of gold for which the investor pays is protected, since he receives the ongoing market price at the time of redemption/ premature redemption. 
• The SGB offers a superior alternative to holding gold in physical form. 
• The risks and costs of storage are eliminated. Investors are assured of the market value of gold at the time of maturity and periodical interest. 
• SGB is free from issues like making charges and purity in the case of gold in jewelry form. 
• The bonds are held in the books of the RBI or in demat form eliminating risk of loss of scrip etc.

2. Risks involved

• There may be a risk of capital loss if the market price of gold declines. However, the investor does not lose in terms of the units of gold which he has paid for.

3.Entities entitled to sell Sovereign Gold Bond Scheme

• Scheduled Commercial banks (except Small Finance Banks and Payment Banks),
• Stock Holding Corporation of India Limited (SHCIL),
• Clearing Corporation of India Limited (CCIL),
• Designated post offices, and
• Recognised stock exchanges viz., National Stock Exchange of India Limited and Bombay Stock Exchange Limited.

4.Elgibility

• Persons resident in India as defined under Foreign Exchange Management Act, 1999 are eligible to invest in SGB. 
• Eligible investors include individuals, HUFs, trusts, universities and charitable institutions. 
• Individual investors with subsequent change in residential status from resident to non-resident may continue to hold SGB till early redemption/maturity and joint holding is allowed.
• The Bonds are issued in denominations of one gram of gold and in multiples thereof. 
• Minimum investment in the Bond shall be one gram with a maximum limit of subscription of 4 kg for individuals, 4 kg for Hindu Undivided Family (HUF) and 20 kg for trusts and similar entities notified by the government from time to time per fiscal year (April – March). 
• In case of joint holding, the limit applies to the first applicant. 
• The annual ceiling will include bonds subscribed under different tranches during initial issuance by the Government and those purchased from the secondary market. The ceiling on investment will not include the holdings as collateral by banks and other Financial Institutions

5.Shortcomings of the Sovereign Gold Bond Scheme

• This is because of the bad design of the product which did not take into account the reason people bought gold, apart from the anonymity.
• The bonds were bought/sold on the basis of the average price five days before the transaction.
• This ensured buyers/sellers lost out on the appreciation of gold.
• Similarly, there was a 5-year lock-in for the bond.
• Similarly to bring in market-makers to ensure greater liquidity for the bonds, they are listed on exchanges.
• It does not make sense to have a lock-in for the bonds.
• A more liquid market will ensure the bonds can be sold, but the lock-in will mean the price got for a sale will be discounted.

6.Physical Gold compared with Sovereign Gold Bond

• Physical Gold and Sovereign Gold Bonds both have their benefits and loopholes, the investor is the one who needs to make decisions according to their financial needs and situations. 
• Investors should keep the above mentioned parameters in mind before making the decision so that the decision comes out to be fruitful and makes the investor achieve their financial goals.