The Reserve Bank of India (RBI) has said he issue price for the Sovereign Gold Bond (SGB) Scheme 2020-21-Series VII, which will be for subscription from October 12 to October 16, has been fixed at Rs 5,051 per gram of gold.
The issue price for the SGB Scheme Series VI, which opened for subscription from August 31 to September 4, was Rs 5,117 per gram of gold. The SGB Scheme 2020-21 Series VIII will open for subscription from November 9 to November 13. The issue price will be announced a few days before the subscription opens.
“The nominal value of the bond 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…works out to Rs 5,051 per gram of gold,” the RBI said.
The central bank 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 that the payment against the application will be made through digital mode. It added that the issue price of a gold bond for such investors will be Rs 5,001 per gram of gold.
The Sovereign Gold Bond Scheme 2020-21, issued by RBI on behalf of the government, are denominated in multiples of grams of gold with a basic unit of 1 gram. The gold bond scheme’s tenure will be eight years and will have an exit option after the fifth year, which will be exercised on the interest payment dates.
The bonds can be bought only by resident individuals, Hindu Undivided Families (HUFs), trusts, universities and charitable institutions. The minimum permissible investment is 1 gram of gold and the maximum limit of subscription is 4kg for individual, 4kg for HUF and 20kg for trusts and similar entities per fiscal. They are sold through banks, except small finance banks and payment banks, the Stock Holding Corporation of India (SHCIL), designated post offices, and recognised stock exchanges (NSE and BSE).
RBI had said in its annual report 2019-20 that 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 central bank had issued 10 tranches of sovereign gold bonds for an aggregate amount of Rs 2,316.37 crore (6.13 tonnes) during 2019-20.
The government launched the Sovereign Gold Bond Scheme in November 2015 to reduce the demand for physical gold and shift a part of the domestic savings, which is used for buying gold, into financial savings.