As per the RBI Annual Report 2019-20, a total of Rs 9,652.78 crore (30.98 tonnes) has been raised through the Sovereign Gold Bonds Scheme (37 tranches) since its inception in November 2015.
The Sovereign Gold Bond Scheme 2020-21 series VI is now open for subscription till Friday, September 4, 2020. The Reserve Bank of India in a statement said that the issue price for the sixth tranche of the Sovereign Gold Bond Scheme has been fixed at Rs 5,117 per gram of gold. Last year, the same bonds of series (V) were available for subscription for August 3 to August 7 for Rs 5,334 per gram of gold.
This sovereign gold bond scheme was launched in November 2015 for the first time. The objective of this sovereign bond was to reduce physical gold demand. This was shifting a part of domestic savings used to purchase gold into financial savings. During 2019-20 RBI issued 10 tranches of 6.13 tonnes of Sovereign Gold Bonds (SGBs) worth Rs 2,316 crore.
"The nominal value of the bond is based on the simple average closing price for gold of 999 purity of the last three business days of the week preceding the subscription period, i.E. August 26? August 28, 2020, works out to Rs 5,117 per gram of gold," the Reserve Bank said.
It further said the government, in consultation with the RBI, has decided to offer a discount of Rs 50 per gram less than the nominal value to those investors applying online and the payment against the application is made through digital mode.
"For such investors, the issue price of a gold bond will be Rs 5,067 per gram of gold," the central bank said.
Sovereign Gold Bond (SGB) 2020-21 is issued by the Reserve Bank India on behalf of the Government of India.
The bonds are denominated in multiples of gram(s) of gold with a basic unit of 1 gram and the tenor of the SGB will be eight years with exit option after the fifth year to be exercised on the interest payment dates.
The bonds are restricted for sale to resident individuals, Hindu Undivided Families (HUFs), Trusts, Universities, and Charitable Institutions.
The minimum permissible investment will be 1 gram of gold and the maximum limit of subscription shall be 4 kg for individual, 4 Kg for HUF, and 20 kg for trusts and similar entities per fiscal (April-March).
The gold bond will be sold through banks (except small finance banks and payment banks), Stock Holding Corporation of India (SHCIL), designated post offices, and recognized stock exchanges (NSE and BSE).
As per the RBI Annual Report 2019-20, a total of Rs 9,652.78 crore (30.98 tonnes) has been raised through the Sovereign Gold Bonds Scheme (37 tranches) since its inception in November 2015.
What is Sovereign Gold Bond Scheme?
Sovereign Gold Bond Scheme 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 Reserve Bank on behalf of the Government of India.
How will the Sovereign Gold Bond Scheme be sold?
The bonds will be sold through scheduled commercial banks (except Small Finance Banks and Payment Banks), Stock Holding Corporation of India Limited (SHCIL), designated post offices, and recognized stock exchanges viz., National Stock Exchange of India Limited and Bombay Stock Exchange Limited.
Who can buy Sovereign Gold Bond Scheme?
The Bonds will be restricted for sale to resident individuals, HUFs, Trusts, Universities, and Charitable Institutions.
What will be the tenor of the Sovereign Gold Bond Scheme?
The tenor of the Bond will be for a period of 8 years with an exit option after the 5th year to be exercised on the interest payment dates.
What is the investment limit of the Sovereign Gold Bond Scheme?
The minimum permissible investment will be 1 gram of gold. The maximum limit of subscribed shall be 4 KG for individual, 4 Kg for HUF, and 20 Kg for trusts and similar entities per fiscal (April-March) notified by the Government from time to time. A self-declaration of this effect will be obtained. The annual ceiling will include bonds subscribed under different tranches during initial issuance by Government and those purchased from the Secondary Market.
Issue price and the online price of Gold Bond
The nominal value of the bond based on the simple average closing price [published by the India Bullion and Jewellers Association Ltd (IBJA)] for gold of 999 purity of the last three business days of the week preceding the subscription period, i.e. Aug 26 – Aug 28, 2020, works out to Rs 5,117 (Rupees five thousand one hundred and seventeen only) per gram of gold, an RBI circular said.
Government of India, in consultation with the Reserve Bank of India, has decided to offer a discount of Rs 50 per gram less than the nominal value to those investors applying online and the payment against the application is made through digital mode. For such investors, the issue price of Gold Bond will be Rs 5,067 (Rupees five thousand and sixty-seven only) per gram of gold. Investors who apply online and the payment against the application are made through digital mode will get it at Rs 50 per gram less than the nominal value. For such investors, the issue price of Gold Bond will be Rs 5,284 (Rupees five thousand two hundred and eighty-four only) per gram of gold.
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