Sovereign Gold Bond opens for subscription, issue price fixed at Rs 5,334 per gram

The fifth tranche of the Sovereign Gold Bond (SGB) Scheme 2020-21 opens on Monday and the issue price has been fixed at Rs 5,334 per gram.

Issued by the Reserve Bank of India (RBI) on behalf of the Union Government, the SGB 2020-21-Series V will be open for subscription from August 3 to August 7. The issue price for SGB series IV, which were open for subscription from July 6 to July 10, was Rs 4,852 per gram of gold.

"The nominal value of the bond based on the simple average closing price for gold of 999 purity of the last three business days of the week preceding the subscription period...works out to Rs 5,334 per gram of gold," the central bank has said.

It said that the government, in consultation with RBI, has decided to offer a discount of Rs 50 per gram less than the nominal value to those investors applying online and the payment against the application is made through digital mode.

“For such investors, the issue price of the gold bond will be Rs 5,284 per gram of gold,” RBI said.

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Sovereign Gold Bonds Schemes

The central bank in April had announced the government will issue Sovereign Gold Bonds (SGBs), part of the central government’s market-borrowing programme, in six tranches beginning April 20 till September.

The bonds are denominated in multiples of gram(s) of gold with a basic unit of 1 gram and the tenor of the SGB will be eight years with exit option after the fifth year to be exercised on the interest payment dates. The bonds are restricted for sale to resident individuals, Hindu Undivided Families (HUFs), trusts, universities and charitable institutions.

The minimum permissible investment will be 1 gram of gold and the maximum limit of subscription shall be 4kg for individual, 4kg for HUF, and 20kg for trusts and similar entities per fiscal (April-March).

The gold bond will be sold through banks (except small finance banks and payment banks), Stock Holding Corporation of India (SHCIL), designated post offices, and recognised stock exchanges (NSE and BSE). The Sovereign Gold Bond Scheme was launched in 2015 with an objective to reduce the demand for physical gold and shift a part of the domestic savings, used for the purchase of gold, into savings.

(With agency inputs)

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