Centre to Issue Sovereign Gold Bonds in 6 Tranches: Issue Price, Interest Rates

The Central government has started the process of borrowing with the launch of sovereign gold bonds in consultation with the Reserve Bank of India on Wednesday.

The Central government has issued Sovereign Gold Bonds in six tranches between May and September 2021.

The subscription date for the Series-I bond for FY 22 is between May 17-May 21. And, the date of issuance is May 25.

The date of subscription for the second tranches is (May 24-May28); for the third tranche (May 31-June 4); for the fourth tranche (July 12-July 16); for the fifth tranche ( August 9-August 13), and for the sixth tranche ( August 30-September 3).

The sovereign gold bond will provide an assured return of 2.50% per annum payable semi-annually on the nominal value.

The bond will be on sale through commercial banks, Stock Holding Corporation of India Limited (SHCIL), designated post offices, National Stock Exchange (NSE), and Bombay Stock Exchange (BSE), either directly or through agents.

As per a press statement issued by the Finance Ministry, the bonds will be denominated in multiples of gram(s) of gold with a basic unit of 1 gram.

Sovereign Gold Bond 2021-22

  • Eligibility:

According to the Finance Ministry, the bonds will be restricted for sale to resident individuals, HUFs, Trusts, Universities, and Charitable Institutions.

  • Tenor:

The tenor of the bond will be for eight years with an exit option after the fifth year to be exercised on the next interest payment dates.

  • Minimum size:

The minimum permissible investment will be 1 gram of gold.

  • Maximum limit:

The maximum limit of subscription shall be 4 Kg for individuals, 4 Kg for HUF, and 20 Kg for trusts and similar entities per fiscal (April-March) notified by the Centre.

However, in the case of joint holding, the investment limit of 4 KG will be applied to the first applicant only.

  • Issue price:

The price of the bond will be fixed in Indian Rupees based on the simple average of the closing price of gold of 999 purity, published by the India Bullion and Jewellers Association Limited for the last 3 working days of the week preceding the subscription period.

  • Redemption price:

The redemption price will be in Indian Rupees based on the simple average of the closing price of gold of 999 purity of the previous three working days published by IBJA Ltd.

  • Tradability:

Bonds will be tradable on stock exchanges within a fortnight of the issuance on a date as notified by the RBI.

  • Collateral:

Bonds can be used as collateral for loans. The loan-to-value (LTV) ratio is to be set equal to the ordinary gold loan mandated by the Reserve Bank from time to time.

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This story has been published from a wire agency feed without modifications to the text.

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Neal Bhai has been involved in the Bullion and Metals markets since 1998 – he has experience in many areas of the market from researching to trading and has worked in Delhi, India. Mobile No. - 9899900589 and 9582247600

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