RBI fixes sovereign gold bond issue price at Rs 5,051 per gram of gold

The issue price for the sovereign gold bond has been fixed at Rs 5,051 per gram of gold, the Reserve Bank of India (RBI) said in a statement on Friday.

The Sovereign Gold Bond Scheme 2020-21-Series VII will be opened for subscription from October 12 to October 16.

"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 5,051 per gram of gold," the RBI said.

It further said the government, in consultation with the 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 gold bond will be Rs 5,001 per gram of gold," the central bank said.

The issue price for the bonds (Series VI), which were open for subscription from August 31 to September 4, was Rs 5,117 per gram of gold.

The Sovereign Gold Bond Scheme (SGB) 2020-21 Series VIII will open for subscription during November 9 to November 13. The issue price will be announced few days before the subscription opens.

Sovereign Gold Bond 2020-21 is issued by the RBI on behalf of the Government of India.

The bonds are denominated in multiples of grams of gold with a basic unit of 1 gram and the tenure of the SGB will be eight years with exit option after 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 4 kg for individual, 4 kg for HUF and 20 kg 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 November 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 financial savings.

According to the RBI Annual Report 2019-20, a total of Rs 9,652.78 crore (30.98 tonnes) has been raised through the sovereign gold bonds scheme (37 tranches) since its inception in November 2015. The RBI issued 10 tranches of sovereign gold bonds for an aggregate amount of Rs 2,316.37 crore (6.13 tonnes) during 2019-20.