The Reserve Bank of India has set the issue price of the latest tranche of sovereign gold bonds. The price has been fixed at ₹ 5,051 per gram. The seventh tranche of sovereign gold bonds would be open for subscriptions from Monday. The decision has been taken that the investors who apply online and make payments against the application through digital mode get a discount of ₹ 50 per gram. Therefore, for those customers who would opt for digital mode for the transaction will pay ₹ 5,001 per gram, after the concession. The Reserve Bank Of India has also set the subscription closing date which is October 16. Therefore the subscription of the Sovereign Gold Bond Scheme 2020-21-Series VII will be available between October 12 and October 16.
Sovereign Gold Bonds have a maturity period of eight years. They also provide an option by which the customer can opt to exit after the fifth year. The redemption price is set on the then prevailing price of the gold.
The issue date of the Sovereign Gold Bonds is set to October 20th. The government has decided to carry out the issuance of the bonds in five more tranches during FY21.
Sovereign Gold Bonds was first introduced in 2015. These SVGs are government securities denominated in grams of gold. The Reserve Bank of India, which is the central bank of the country issues these Sovereign Gold Bonds on behalf of the central government. It was issued to reduce the demand for physical gold and shift a part of the domestic savings into financial savings.
In Mumbai retail market, the gold price was seen to fall by ₹ 757 to ₹ 50,287 per 10 gram, on the 7th of October.
The issue price in the latest issue of gold bonds has been fixed 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, October 07 – October 09. The government has also set the minimum permissible investment which is 1 gram of gold.
The maximum limit for any investor is set at 4 Kg per individual, 4 kg for Hindu undivided families (HUFs), and 20 kg for trusts and similar entities. The government had announced six tranches in April for the 2020-21 fiscal year. They had offered six more tranches in October.
The Sovereign Gold Bonds would be sold from banks. They will be available in banks except those which are small finance banks and payment banks. They would also be available at Stock Holding Corporation of India (SHCIL), designated post offices, and recognized stock exchanges (NSE and BSE).
These gold bonds offer an annual interest rate of 2.50 percent for the investors. They also offer the benefit that the investors would not have to worry about the storage of gold if held in demat form. Unlike physical gold, the government would not levy GST to the investors. Also, if there is any capital gain during maturity, it would be available tax-free.
Subscription dates for the remaining tranches:
2020-21 Series VIII: November 9, 2021 – November 13, 2021
2020-21 Series IX: December 28, 2020-January 1, 2021
2020-21 Series X: January 11, 2021- January 15 2021
2020-21 Series XI: February 1, 2021- February 5, 2021
2020-21 Series XII: March 1, 2021- March 5, 2021