Sovereign Gold Bond opens tomorrow: Issue price fixed at Rs 4,590 per gram; here's all you need to know about scheme

Sovereign gold bond investors can be individuals, trusts, universities, charitable bodies or Hindu Undivided Families

FP Staff May 10, 2020 11:35:51 IST
Sovereign Gold Bond opens tomorrow: Issue price fixed at Rs 4,590 per gram; here's all you need to know about scheme

The Sovereign Gold Bond Scheme (SGB) 2020-21-Series II open for subscription tomorrow-11 May 2020 and will close on 15 May, 2020.

The issue price has been fixed at Rs 4,590 per gram of gold, the Reserve Bank of India said in a statement on Friday.

SGB investors can be individuals, trusts, universities, charitable bodies or Hindu Undivided Families (HUFs).

Last month, the central bank had said the government will issue SGBs in six tranches, beginning 20 April till September.

Sovereign Gold Bond opens tomorrow Issue price fixed at Rs 4590 per gram heres all you need to know about scheme

Representative image. Reuters

"The nominal value of the bond based on the simple average closing price (published by the India Bullion and Jewellers Association Ltd) for gold of 999 purity of the last three business days of the week preceding the subscription period...works out to Rs 4,590 per gram of gold," RBI said in the statement.

RBI has announced the dates of upcoming installations till September.

The first instalment of the SGB 2020-21 series was open for subscription from 20-24 April. The issue price for Series I (20-24 April, 2020) was Rs 4,639 per gram of gold.

"The nominal value of the bond based on the simple average closing price (published by the India Bullion and Jewellers Association Ltd) for gold of 999 purity of the last three business days of the week preceding the subscription period...works out to Rs 4,590 per gram of gold," RBI said in the statement.

It further said that Government of India has decided to offer a discount of Rs 50 per gram less than the nominal value to those investors applying online and making payment against the application through digital mode.

For such investors, the issue price of gold bond will be Rs 4,540 per gram of gold, it said.

The sovereign gold bond scheme was launched in November 2015 with an objective to reduce the demand for physical gold, and shift a part of domestic savings, used for purchase of gold, into financial savings.

All you need to know about sovereign gold bond scheme:

SGB is a government-run scheme that allows gold investments in non-physical form.

It comprises government securities denominated in gold wherein investors are required to pay the issue price in cash. The bonds are redeemed in cash on maturity.

The interest rate of the gold bond is fixed at 2.5 percent per annum, which is payable twice a year.

These bonds are sold through scheduled commercial banks (except small finance banks and payment banks), Stock Holding Corporation of India Limited (SHCIL), designated post offices, and recognised stock exchanges viz., National Stock Exchange of India Ltd and Bombay Stock Exchange Ltd, according to RBI.

These are restricted for sale to resident individuals, Hindu Undivided Families (HUFs), trusts, universities and charitable institutions.

The SGBs are denominated in multiples of gram(s) of gold with a basic unit of 1 gram.

The issue price of these bonds are fixed in Indian rupee on the basis of simple average of closing price of gold of 999 purity, published by the India Bullion and Jewellers Association Ltd for the last 3 working days of the week preceding the subscription period.

The tenor of the bond are for a period of 8 years with exit option after fifth year to be exercised on the interest payment dates.

The minimum permissible amount allowed for investment in SGB is one gram of gold. The maximum limit of the subscription is four kilograms for individuals and HUFs, and 20 kilograms for trusts and similar entities per fiscal year (April-March), which is notified by the government from time to time.

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