The third tranche of the government-run Sovereign Gold Bond (SGB) scheme will open for subscription for five days beginning on Monday, June 8. RBI (Reserve Bank of India) has issued these Sovereign Gold Bonds, denominated in multiples of one gram of gold to further the plan of Government’s market borrowing programme.
On June 6, RBI announced the issue price of SGB for the third tranche at Rs 4,677 per gram. The price is decided based on a simple average of the closing price 999-purity gold published by the Mumbai based Indian Bullion and Jewellers Association (IBJA) for the last three working days of the week preceding subscription. Online investors subscribing through digital mode will get a discount of Rs 50 on every gram of gold and the redemption price will be determined through the same method.
The demand for gold has increased as it is being considered as a safe investment option in the Financial Market under the current COVID Pandemic Situation. The government used this opportunity to issue Sovereign Gold Bonds through RBI under its market borrowing programme. The fixed-rate on the SGB is 2.5 per cent which is required to be paid semi-annually and is taxable without any exemption option except for individual investors. The tenor for the scheme is 8 years and the exit option is only available in 5th year which can be exercised on interest payment dates.
Universities, trusts, Charitable institutions, Residential individuals and Hindu Undivided Families (HUFs) can invest through commercial banks, stock holding corporations, BSE and NSE and designated post offices. Eligible individuals and HUFs can invest in 1 gram to up to 4 kg of gold in a financial year while trusts and similar entities can make an investment in gold up to 20 Kg.