Ahead of PM Modi's gold scheme launch today, RBI unveils guidelines on sovereign gold bonds

The Reserve Bank of India (RBI) has issued operational guidelines for Sovereign Gold Bonds, 2015-16, to be launched by Prime Minister Narendra Modi today. Besides Sovereign Gold Bonds, Modi will also launch two other gold related schemes – Gold Monetisation Scheme (GMS) and the Gold Coin and Bullion Scheme. [caption id=“attachment_2495958” align=“alignleft” width=“380”]  Reuters[/caption] Issuing the operational guidelines on the gold bonds, RBI said application forms from investors will be received at branches during normal banking hours from November 5 to 20. “Relevant additional details may be obtained from the applicants, where necessary. Receiving offices need to ensure that the application is complete in all respects,” it said. Regarding interest on application money, RBI said applicants will be paid interest at prevailing savings bank rate from the date of realisation of payment to the settlement date (the period for which they are out of funds). In case the applicant’s bank account is not with the receiving bank, the interest has to be credited by electronic fund transfer to the account details provided by the applicant, the guidelines said. It added that banks may engage NBFCs, NSC agents and others to collect application forms on their behalf. Banks may enter into arrangements or tie-ups with such entities. RBI also said that the bonds will be available for subscription at the branches of scheduled commercial banks and designated post offices through RBI’s e-kuber system. The e-kuber system can be accessed either through Infinet or Internet. Cancellation of application is permitted till the closure of the issue (November 20). Part cancellation of submitted request for purchase of gold bonds is not permitted. No interest on application money needs to be paid if the application is cancelled. The bonds will be issued on November 26. They will be denominated in multiples of gram(s) of gold with a basic unit of 1 gram. The tenor of the bond will be for a period of 8 years with exit option from 5th year. Investors will be compensated at a fixed rate of 2.75 percent per annum payable semi-annually on the initial value of investment. The GMS will replace the existing Gold Deposit Scheme, 1999. However, the deposits outstanding under the Gold Deposit Scheme will be allowed to run till maturity unless the depositors prematurely withdraw them, the Finance Ministry said in a statement. The Indian gold coin is a part of the Gold Monetisation Programme. The coin will be the first ever national gold coin and will have the National Emblem of Ashok Chakra engraved on one side. PTI