Home / Markets / Commodities /  Sovereign gold bond to open from August 9: Issue price, other details

The fifth tranche of sovereign gold bonds will be available for subscription from August 9 to August 13, the Reserve Bank of India stated on Friday. The issue price of bond during the subscription period will be 4,790 per gram. The settlement date for this issue will be August 17, 2021.

"The nominal value of the bond 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, i.e. August 04, August 05 and August 06, 2021 works out to 4,790 per gram of gold," RBI said.

The central government, in consultation with the Reserve Bank of India, has decided to offer a discount of 50 per gram to investors applying online and the paying through digital mode. For such investors, the issue price of gold bond will be 4,740 per gram of gold.

The bonds will be 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 - National Stock Exchange and Bombay Stock Exchange.

The bonds can be paid for via cash (up to a maximum of 20,000), demand draft, cheque or internet banking.

The government has decided to issue six tranches of sovereign gold bonds between May and September this year. Gold bonds were launched in November 2015 to reduce the demand for physical gold and shift a part of the domestic savings into financial savings.

The gold bonds can be held by trusts, HUFs, charitable institutions, universities or individuals. The bonds will be issued in multiples of grams of gold, with the minimum allowed denomination being one gram.

The maximum limit per fiscal for individuals and HUFs is 4kg, and 20 kg for trusts and similar entities notified by the government. The price of the bond is fixed in Indian rupees on the basis of a simple average of the closing price of gold of 999 purity, published by the India Bullion and Jewellers Association Limited for the last three working days of the week preceding the subscription period.

The interest in the gold bonds will commence from the date of issue at the rate of 2.5 per cent per annum on the nominal value of the bond. It will be payable in half-yearly rests and the last interest will be paid along with the principal on maturity.

The tenor of the bonds will be eight years from the date of issue. Premature redemption will be allowed after the fifth year, with repayments made on the next interest payment date.

The interest on gold bonds is taxable as the provisions of Income-tax Act. The capital gains arising on redemption of these bonds to an individual is exempted

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