Next tranche of sovereign gold bond scheme on 10 July
New Delhi: The government will launch the next tranche of sovereign gold bond (SGB) scheme, the first in 2017-18, on 10 July.
The bonds will be sold through banks, Stock Holding Corporation of India Ltd (SHCIL), designated post offices, and the National Stock Exchange and the BSE, the finance ministry said in a statement on Thursday.
The SGB scheme was launched in November 2015 with an objective to reduce the demand for physical gold and shift a part of the domestic savings, used for purchase of gold, into financial savings.
“The Government of India, in consultation with the RBI (Reserve Bank of India), has decided to issue sovereign gold bonds 2017-18 – Series II. Applications for the bonds will be accepted from 10-14 July 2017. The bonds will be issued on 28 July 2017,” it said.
Under the scheme, the bonds are denominated in units of one gramme of gold and multiples thereof.
Minimum investment in the bonds is one gramme, with a maximum limit of subscription of 500 grammes per person per fiscal year (April–March).
The government has so far issued eighth tranches of SGBs and mobilised Rs5,400 crore till date.
Investors in these bonds have been provided with the option of holding them in physical or dematerialised form.
As per the statement, the bonds with tenure of 8 years will be tradable on stock exchanges within a fortnight of the issuance on a date as notified by the RBI.
The investors will be compensated at a fixed rate of 2.50% per annum payable semi-annually on the nominal value, the notification said.
The first issue had offered bond holders an annual interest rate of 2.75%. India imports around 1,000 tonnes of gold every year, resulting in large-scale foreign exchange outflows.
Payment for the bonds will be through cash payment (up to a maximum of Rs20,000) or demand draft or cheque or electronic banking. The maximum amount subscribed by an entity will not be more than 500 grammes per person per fiscal year. A self- declaration to this effect will be obtained.
In case of joint holding, the investment limit of 500 grammes will be applied to the first applicant only.
Price of bond will be fixed in rupees 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 week (Monday to Friday) preceding the subscription period.
The issue price of the gold bonds will be Rs50 per gramme less than the nominal value. The bonds can be used as collateral for loans.
The loan- to-value ratio is to be set equal to ordinary gold loan mandated by RBI from time to time.
The capital gains tax arising on redemption of SGB to an individual has been exempted.
The indexation benefits will be provided to long-term capital gains arising to any person on transfer of bond.