The first tranche of the Sovereign Gold Bonds (SGB) scheme will open for public subscription on Monday, the government has announced.
"Government of India has decided to issue Sovereign Gold Bonds 2017-18 - Series I. Applications for the bond will be accepted from April 24, 2017 to April 28, 2017," a Finance Ministry statement said here on Thursday.
On Friday, the Reserve Bank of India announced the issue price for this tranche as Rs 2,901 per gram of gold.
The Ministry said the bonds will be issued on May 12, 2017.
"The price of bonds will be fixed in Indian Rupees on the basis of simple average of closing price of gold of 999 purity published by the India Bullion and Jewellers Association for the week (Monday to Friday) preceding the subscription period," it said.
"The issue price of the gold bonds will be Rs 50 per gram less than the nominal value," it added.
The issue price of the bonds has been fixed at Rs 50 per gram, less than the nominal value of gold and the bonds would earn an interest of 2.75 per cent per annum, payable every six months on initial investment.
The tenure of the bond will be for a period of 8 years, with an exit option from the fifth year to be exercised on the interest payment dates.
The government said the bonds will be sold through banks, post offices, Stock Holding Corporation of India (SHCIL), and recognised stock exchanges -- National Stock Exchange (NSE) and Bombay Stock Exchange (BSE).
SGBs are denominated in multiples of gram of gold with a minimum unit of 1 gram and maximum of 500 grams, which is the maximum amount permissible for subscription per person per fiscal year.
SGBs can also be held in demat form for ease of trading.
Till date, the government has issued seven tranches of SGBs mobilising 6,410 kg of gold, as per data furnished last month.
The government launched the Sovereign Gold Bond Scheme in November 2015 as an alternative to purchasing metal gold.
The scheme intends to reduce the demand for physical gold and mobilise the idle gold held by households and institutions in the country and to put this gold into productive use in the long run.
This will help reduce the current account deficit by reducing the country's reliance on the import of gold to meet the domestic demand.