Buying SGB in secondary market

Bonds
1

I have been trading SGB in secondary market (BSE / NSE) quite a few times and I have few doubts.

  1. I have noticed the symbol of same trench of SGB is different in BSE and NSE, like aug 2020 trench is called as SGBAUG28 in BSE where as SGBAUG28V-GB in NSE. Why is it so? do they belong to the same trench at all? if I buy either of them, am I essentially buying the same bond/trench?

  2. Further more, I see there is a huge price difference between BSE and NSE of the same SGB issue. can I choose to buy the cheapest one available and still I am receiving the same bond ?

  3. Can I buy an sgb issue from BSE at cheaper price and sell it in NSE at higher price?

  4. No matter from where I buy, I am still entitled to received the same interest at 2.5%?

  5. where I can see the accrued interest on SGB which I bought in Zerodha platform?

1 Like
2

It is just the name difference, the underlying security is the same.

Price difference is down to Supply and Demand. You can buy where the price is lower, you will receive the same bond. As mentioned above, there is only difference in name between both exchanges, the underlying security is the same.

You can do this but you need to be aware of lack of liquidity.

It doesn’t matter if you purchase from BSE or NSE, you are entitled to receive interest.

Interest pay-out happens directly in your bank account, you can check your bank account statement for the same.

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3

On huge price difference between BSE and NSE, most of the time it is misleading. This is because liquidity is very low and not enough trades are happening.
For eg. prices would be showing as BSE-4500 and NSE-4800 … giving a sense that there is arbitrage opportunity.
But when you actually try to buy at 4500, trade will not happen as there is no liquidity.
This is true not only for SGB but also for other illiquid NCDs.

2 Likes
4

Thanks Akash.

5

Thanks Subh

6

@ShubhS9 I have 2 doubts regarding buying SGB from secondary market -

  1. How can I check interest payout date for each SGB other than checking out the bank statement?
  2. If I buy a SGB issued 4 years back, then just by holding for 1 more year can I sale it to RBI? If yes, then will this capital gain (if so) be tax free?

Also I want to know is there any negative point in buying SGB from secondary market instead of from RBI (apart from the price difference)?

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7

@sachinsp15

  1. I haven’t found any easy way for finding exact date but generally symbol of SGB has maturity month and year. Interest is paid out in 6 months multiple of that. eg SGBDC27VII-GB will be paying out interest in June and December of every year. For Exact date, I refer my bank statement.
  2. No, I think tax exemption is available only when redemption happens on 8th year and not for premature redemption. So you will have to hold for 4 more years in your example.
8

Hi @Akash_Shah

Thanks for your reply.

With reference to following video from ET Money -

They have clearly mentioned we can redeem SGB with RBI after 5 year of completion and any redemption with RBI is always tax free.

Do you know any RBI’s official paper on the rules and regulation of SGB? It looks like no one has full clarity around SGB.

9

Well, I haven’t seen the video but I have seen numerous articles on business website which indicates that redemption on maturity is tax free and premature redemption is not. One article from Mint below.
RBI website FAQ also says that " The capital gains tax arising on redemption of SGB to an individual has been exempted." But it is silent on premature redemption.

As such I think first SGB should be finishing 5 years somewhere in July-Aug this year. Only then there will be see clarity coming.
Also I believe this process of premature redemption is not going to be smooth. You will have to give application 30 days before the date and might need some efforts in getting proceeds. (That’s just my thought)

10

Check this page on the RBI website. In the table present on that page, there is a column which is called Commencement of premature redemption which lists the interest payment dates (as the Early exit option after 5 years can only be done on the Interest payment date). Starting from Tranche 10, it lists interest payment dates that are different from the issuance date (which is also an interest payment date) hence sharing both interest payment dates for every tranche. For the second interest payment date for Tranches 1-9, we can get some of that information from the BSE website (like for example, second interest payment date Tranche 1 is May 30th as per BSE website). Some Tranches (aka 2-3) don’t have any information present about the second interest payment date on the BSE website and those dates I have derived based on estimates. Also, the actual interest payment dates will likely differ a bit if that date is a banking holiday or a non-working day. I have compiled the data from the RBI website and BSE website in the table below -

S.No. Tranche Interest Payment Date 1 Interest Payment Date 2
1 2015-I November 30th May 30th (From BSE)
2 2016-I February 08th August 08th (Derived)
3 2016-II March 29th September 29th (Derived)
4 2016-17 Series I August 05th February 05th (From BSE)
5 2016-17 Series II September 30th March 30th (From BSE)
6 2016-17 Series III November 17th May 17th (From BSE)
7 2016-17 Series IV March 17th September 17th (From BSE)
8 2017-18 Series I May 12th November 12th (From BSE)
9 2017-18 Series II July 28th January 28th (From BSE)
10 2017-18 Series III October 16th April 16th
11 2017-18 Series IV October 23rd April 23rd
12 2017-18 Series V October 30th April 30th
13 2017-18 Series VI November 06th May 06th
14 2017-18 Series VII November 13th May 13th
15 2017-18 Series VIII November 20th May 20th
16 2017-18 Series IX November 27th May 27th
17 2017-18 Series X December 04th June 04th
18 2017-18 Series XI December 11th June 11th
19 2017-18 Series XII December 18th June 18th
20 2017-18 Series XIII December 26th June 26th
21 2017-18 Series XIV January 01st July 01st
22 2018-19 Series I May 04th November 04th
23 2018-19 Series II October 23rd April 23rd
24 2018-19 Series III November 13th May 13th
25 2018-19 Series IV January 01st July 01st
26 2018-19 Series V January 22nd July 22nd
27 2018-19 Series VI February 12th August 12th
28 2019-20 Series I June 11th December 11th
29 2019-20 Series II July 16th January 16th
30 2019-20 Series III August 14th February 14th
31 2019-20 Series IV September 17th March 17th
32 2019-20 Series V October 15th April 15th
33 2019-20 Series VI October 30th April 30th
34 2019-20 Series VII December 10th June 10th
35 2019-20 Series VIII January 21st July 21st
36 2019-20 Series IX February 11th August 11th
37 2019-20 Series X March 11th September 11th
38 2020-21 Series I April 28th October 28th
39 2020-21 Series II May 19th November 19th
40 2020-21 Series III June 16th December 16th
41 2020-21 Series IV July 14th January 14th
42 2020-21 Series V August 11th February 11th
43 2020-21 Series VI September 08th March 08th
44 2020-21 Series VII October 20th April 20th
45 2020-21 Series VIII November 18th May 18th
46 2020-21 Series IX January 05th July 05th
47 2020-21 Series X January 19th July 19th
48 2020-21 Series XI February 09th August 09th
49 2020-21 Series XII March 09th September 09th
50 2021-22 Series I May 25th November 25th
51 2021-22 Series II June 01st December 01st
52 2021-22 Series III June 08th December 08th
53 2021-22 Series IV July 20th January 20th
54 2021-22 Series V August 17th February 17th
55 2021-22 Series VI September 07th March 07th
56 2021-22 Series VII November 02nd May 02nd
57 2021-22 Series VIII December 07th June 07th
58 2021-22 Series IX January 18th July 18th
59 2021-22 Series X March 08th September 08th
60 2022-23 Series I December 28th June 28th
61 2022-23 Series II February 28th August 30th

Also, I had shared information about symbols of each SGB (until the 61st Tranche) on both NSE and BSE in this thread.

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11

Where can I see volumes of all SGB in single list.

12

Check this page on the NSE website. It shows daily volumes for all the 47 tranches of SGBs

Another forum member suggests using eMarket Watch feature in ICICIDirect (in case you have an account with them) as that allows sorting based on volumes of SGBs for both NSE and BSE

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13

Hello, can you please inform me, when the SGB of February 2021 will credit to my demat account. The issue date was 9th February.

14

It can take around 10 - 15 days from issue closure date for SGB to be credited to your Demat account. You’ll receive email from CDSL when credit happens.

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15

I have purchased few SGBAUG28 from secondary market. It is available in my demat account.

Today is 12th February but I didn’t received any interest in my bank account yet, is anything wrong here?

The issuence date of this security is 11th Aug 2020.

16

You should receive in a day or two. If not then you can write to the RTA, for SGB’s and G-Sec’s NSDL and CDSL act as RTA’s so you can write to them.

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17

@Avishek_Dey, even I haven’t received the interest for the SGBAUG28 bought from secondary market through zerodha. We shall wait till next Wednesday (17th feb) . After that we will raise the complaint with CDSL.

@ShubhS9, is there any mail id of CDSL for contact with respect to this issue??

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18

You can write to CDSL from here.

19

You should have got the email and the credit by now. Few of my colleagues got it at 10pm

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@AJ007, unfortunately I haven’t got the credit yet and no mail also. Have you got the credit?