6.3 Other Investment Products
Key Takeaways
- Sovereign Gold Bonds (SGB) are RBI-issued government bonds linked to gold, with an 8-year tenor, a 2.5% p.a. semi-annual coupon, an exit option after 5 years, and full capital-gains tax exemption if held to maturity; new issuances have been paused since February 2024 but secondary-market buying on NSE/BSE remains available.
- REITs and InvITs are SEBI-regulated trusts that pool rent-yielding real estate or infrastructure assets; the minimum investment for publicly offered units was cut to ₹10,000-₹15,000 in 2021 (with a 1-unit trading lot), and the 2025 SEBI amendment reduced the minimum for privately placed InvITs to ₹25 lakh.
- Commodities such as gold and silver are traded on MCX via derivatives and (for gold) through SGBs and ETFs; commodity derivatives are overseen by SEBI after the 2015 Forward Contracts (Amendment) Act.
- Small savings schemes — NSC (7.7%, 5-year), Kisan Vikas Patra (7.5%, doubles in 115 months), Senior Citizen Savings Scheme (8.2%), Sukanya Samriddhi Yojana (8.2%) — are Government of India products offering sovereign safety and 80C / 80C-equivalent deductions.
- Diversification is the reason each of these products exists in a portfolio: gold hedges equity and currency shocks, REITs/InvITs add a real-asset income stream, commodities hedge inflation, and small savings provide a sovereign-safety ballast against equity volatility.
Sovereign Gold Bonds (SGB)
Quick Answer: A Sovereign Gold Bond is a Government of India debt instrument denominated in grams of gold, issued by the RBI on the government's behalf. It pays a fixed 2.5% p.a. coupon semi-annually on the initial investment, has an 8-year tenor with an exit option after 5 years (on coupon dates only), and gives a full capital-gains tax exemption if held to maturity or redeemed via the early-exit window. New primary issuances have been effectively paused since February 2024, but existing SGBs trade on NSE/BSE in demat form.
SGBs were designed to shift Indian gold demand away from physical gold (which sits idle in lockers and incurs making charges and storage risk) into a sovereign-guaranteed paper instrument. The redemption price is the simple average of the closing gold price (999 purity) published by the India Bullion and Jewellers Association (IBJA) for the three business days preceding the redemption date, so the investor captures gold-price upside without holding physical metal.
Key features:
| Feature | Rule |
|---|---|
| Minimum investment | 1 gram of gold |
| Maximum investment | 4 kg per individual / HUF per FY; 20 kg for trusts |
| Issue price | Average of last 3 business days' gold price (IBJA), less ₹50/gram online discount |
| Coupon | 2.5% p.a. on initial investment, paid semi-annually, taxable at slab |
| Tenor | 8 years, exit option after 5 years (on coupon dates) |
| Capital gains at maturity / RBI early redemption | Fully exempt |
| Capital gains on secondary-market sale | LTCG at 12.5% if held > 12 months |
| Tradable | Yes, on NSE/BSE if held in demat |
| Collateral | Allowed for loans (LTV same as ordinary gold loans) |
Important 2025-26 status: No fresh primary tranche has been issued since February 2024; the government appears to be pausing new SGB issuance in line with its broader stance on gold imports. Existing bonds continue to be honoured to maturity and trade in the secondary market.
REITs and InvITs
A Real Estate Investment Trust (REIT) pools income-producing commercial real estate (office, retail, warehouse, data centre) and distributes at least 90% of net distributable cash flow to unit-holders. An Infrastructure Investment Trust (InvIT) does the same for infrastructure assets (roads, power transmission, pipelines, telecom towers). Both are SEBI-regulated under the SEBI (REIT) Regulations 2014 and SEBI (InvIT) Regulations 2014.
Minimum investment — verified position
- Publicly offered REIT / InvIT units: minimum application value ₹10,000–₹15,000, trading lot 1 unit — fixed by SEBI in July 2021 and unchanged since.
- Privately placed InvITs: the June 2025 SEBI amendment reduced the minimum allotment in the primary market to ₹25 lakh (down from ₹1 crore / ₹25 crore depending on asset type), aligning it with the existing ₹25 lakh secondary-market trading lot.
Why REITs / InvITs matter for diversification
They give a retail investor access to institutional-grade real estate and infrastructure with a small ticket size, a listed and tradable instrument, and a regular income distribution — a combination that was previously available only to large institutions. They are taxed as a pass-through: distributions are taxed in the hands of unit-holders at their slab rate (interest portion) or as capital gains (capital-gains portion), as per the nature of the income.
Commodities and Small Savings Schemes
Commodities
Commodities (gold, silver, agricultural products, base metals, energy) are traded on the Multi Commodity Exchange (MCX) and other SEBI-recognised exchanges through futures and options. Since the 2015 Forward Contracts (Amendment) Act, SEBI regulates commodity derivatives in India (previously the Forward Markets Commission). For most retail investors, gold exposure is more efficiently taken through SGBs or gold ETFs rather than futures, which carry margin, roll-over and leverage risk.
Small savings schemes (July–September 2026 rates)
| Scheme | Rate | Tenor | Tax deduction |
|---|---|---|---|
| Public Provident Fund (PPF) | 7.1% p.a. | 15 years | 80C ₹1.5L |
| National Savings Certificate (NSC) | 7.7% p.a. | 5 years | 80C ₹1.5L |
| Kisan Vikas Patra (KVP) | 7.5% p.a. | Doubles in 115 months | None |
| Senior Citizen Savings Scheme (SCSS) | 8.2% p.a. | 5 years (extendable 3) | 80C ₹1.5L |
| Sukanya Samriddhi Yojana (SSY) | 8.2% p.a. | Till girl's marriage / 21 yrs | 80C ₹1.5L |
| Post Office Monthly Income Scheme (MIS) | 7.4% p.a. | 5 years | None |
| 5-Year Time Deposit | 7.5% p.a. | 5 years | 80C ₹1.5L (only 5-yr) |
All small savings rates are notified quarterly by the Ministry of Finance; the rates above are for Q2 FY 2026-27 (July–September 2026) and were held unchanged for the ninth consecutive quarter, even though the RBI repo rate now stands at 5.25%. Interest on most small savings (except PPF and SSY, which are EEE) is taxable at the subscriber's slab rate.
Role in diversification
- SGB — gold-price hedge; counter-cyclical to equity and to the rupee.
- REITs / InvITs — real-asset income stream with low correlation to equity and bond markets.
- Commodities — inflation hedge, particularly energy and agricultural products.
- Small savings — sovereign-safety ballast that anchors a portfolio when equity volatility rises.
An investor wants a sovereign-backed gold exposure with a regular interest income and full capital-gains exemption at maturity. Which product fits, and what is its tenor and coupon?
What is the current minimum investment for a publicly offered REIT or InvIT unit on the Indian exchanges, and what was the most recent SEBI change in 2025?